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Jan 27 (Reuters) - (The following statement was released by the rating agency)
Aluminium prices in China will remain low for at least the next two years as new plants with cost advantages come on line, Fitch Ratings says in a new report released today. The new plants have lower cost structures because they are mostly located in the western part of China to take advantage of cheaper power that stems from abundant coal supplies in the region. Many of the new aluminium facilities also have their own power plants to control power costs, which form a major part of their total production costs. The additional capacity in 2013 and 2014 will exacerbate the intense competition in an already over-supplied market.
The Chinese government in October 2013 released fresh guidelines that provide more specific measures to tackle the persistent overcapacity in the aluminium sector. These steps include shutting inefficient energy plants through differentiated power tariffs, and banning government subsidies. The government also intends to increase aluminium demand through the promotion of light-weight transportation vehicles.
The report, a€˜Chinese Aluminium Prices to Remain Structurally Lowa€™, is available at www.fitchratings.com or by clicking on the link below.
Link to Fitch Ratings' Report: Chinese Aluminium Prices to Remain Structurally Low