* More than half new capacity to come from hydropower-rich Yunnan * Antaike now expects China aluminium consumption to rise in 2020 * Sees 820,000 T net primary metal inflow, double earlier forecast By Min Zhang and Shivani Singh CHONGQING, China, Oct 14 (Reuters) - China will launch another 3 million tonnes of annual aluminium production capacity in 2021 - more than half of it in the emerging smelting hub of Yunnan province, research house Antaike said on Wednesday. Abundant hydropower for the energy-intensive smelting process has brought major aluminium producers like China Hongqiao Group to Yunnan after the government, which plans to limit capacity to about 45 million tonnes, said companies would need to be in clean-energy-rich areas to keep developing. Antaike, the research arm of the China Nonferrous Metals Industry Association, sees 1.88 million tonnes of capacity coming on stream in Yunnan, in southwest China, next year, following 1.63 million tonnes this year, analyst Wang Hongfei said at the China International Aluminum Week conference in Chongqing. It also expects 370,000 tonnes to launch in Guangxi, 550,000 tonnes in Inner Mongolia and 100,000 tonnes apiece in Shanxi and Guizhou in 2021. While installed capacity will reach an estimated 43 million tonnes at end-2020, the 45 million tonnes ceiling will not be breached next year because some of the additions involve swapping decommissioned capacity for new production, Wang said following her presentation. Primary aluminium consumption in China, the world's biggest producer and user of the metal, is seen rising by 1.7% in 2021. That follows a projected 1.6% increase in consumption in 2020 - a revision of Antaike's earlier forecast of a drop in the wake of the coronavirus pandemic. "We expect traditional demand will gradually recover and new infrastructure will bring new consumption," said Wang, cautioning that China's aluminium exports still face a "severe" situation due to trade friction. Antaike also more than doubled its forecast for China's net primary aluminium imports this year. China's primary aluminium market balance (tonnes) Source: Antaike 2019 2020E 2021E 2021/2020 pct chg Production 35.93 mln 37.15 mln 38 mln 2.30% Net imports -10,000 820,000 200,000 N/A Total supply 35.93 mln 37.97 mln 38.2 mln 0.60% Consumption 36.62 mln 37.2 mln 37.85 mln 1.70% Supply-demand balance -690,000 770,000 350,000 N/A Separately, Antaike analyst Huo Yunbo said China would add 6.7 million tonnes of capacity for aluminium raw material alumina in 2021 and another 4.6 million tonnes in 2022. Current capacity is 88.15 million tonnes. China's alumina market balance (tonnes) Source: Antaike 2019 2020E 2021E Production 71.55 mln 70.49 mln 72.9 mln Net imports 1.41 mln 3.5 mln 4 mln Total supply 72.96 mln 73.99 mln 76.9 mln Total demand volume 71.98 mln 74.53 mln 76.16 mln Supply-demand balance 980,000 -540,000 740,000 (Reporting by Min Zhang and Shivani Singh; writing by Tom Daly Editing by Robert Birsel)
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