China's demand for aluminium expected to rise in 2014

China’s economy is expected to continue picking up speed next year, with metals demand helped by state-led urbanisation projects.

Recent economic data has reinforced hopes for a sustained recovery, with factory output in August hitting a 17-month high, retail sales growing at their fastest pace this year and power production posting the second-highest monthly growth this year.

Aluminium consumption is expected to grow more than 10 per cent next year from about 24 million tonnes estimated for this year, two smelter sources said.

The sector should benefit from more building activity and Beijing’s efforts to boost demand to tackle overcapacity in the industry, with growth picking up from near 10 per cent this year, they said.

A manager at a plant that uses primary aluminium to manufacture semi-finished products said the firm’s local and export orders of large aluminium profiles had more than doubled this year and it expected orders to rise further next year.

The product is a new mould being used in the building industry in China to replace steel because of its longer life, the manager said, adding that the provincial government of Guizhou was considering requiring all local projects to use aluminium moulds from next year.

Demand from transport equipment makers would also rise after Beijing approved a series of rail projects this year, the sources said.

China’s State Reserves Bureau is not expected to buy aluminium for stockpiling next year, after purchasing 300,000 tonnes this year, owing to concerns about firmer local prices and in order not to encourage new production, they said.

Nonetheless, the increase in consumption may lag capacity, which is expected to grow by about five million tonnes next year.