Indonesia’s possible ban on raw ore exports will pose threat to China’s aluminum output

Indonesia’s Possible Ban on Raw Ore Exports Will Pose Threat to China’s Aluminum Output. A source with Deutsche Bank claimed last Wednesday that China’s aluminum output may fall if the Indonesian government imposes a ban on unprocessed ore exports.

Based on current aluminum prices , 35% of Chinese aluminum producers are suffering losses, Tim Reyes, President of Alcoa Materials Management, said last Wednesday.

China’s Aluminum Capacity Cuts Will Do Little to Ease Global Aluminum Overcapacity
According to the CRU last Tuesday, 1 million mt/yr in aluminum capacity in China has been temporarily closed so far this year. Another 300,000 mt/yr in aluminum capacity in east China may be cut if aluminum prices remain depressed. Ling Wong and Yanchen Wang, both senior consultants at CRU, understand that China’s aluminum capacity cuts will do little to ease global aluminum overcapacity as the country is now building aluminum smelters in Xinjiang.

China’s current aluminum capacity is 24 million mt/yr, compared with 28 million mt/yr in equipment capacity, Mr Wang said.

Aluminum Financing to Drop from 2015
A senior consultant at CRU expects aluminum financing to decrease from 2015 as yield rate of aluminum financing will drop.

Xinjiang’s Aluminum Capacity to Hit 3.7 Mln Mt/Yr in 2013
Aluminum capacity in Xinjiang grew from less than 500,000 mt/yr to nearly 1.8 million mt/yr during 2010-2012, an over 300% surge. In 2013, aluminum capacity in Xinjiang is expected to hit 3.7 million mt/yr, up 106% YoY, with the growth rate outpacing the average national level.

Considering that most support facilities will not enter operations until the second half of this year and aluminum liquid consumption during production and local climate, new aluminum capacity in Xinjiang will have only limited effect on primary aluminum output for the entire year of 2013. Xinjiang’s aluminum output is expected to grow 33% YoY to 2.4 million mt in 2013, with aluminum capacity in operation and operating rates projected at 3.1 million mt/yr and 84%, respectively.