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China aluminium demand to rise 3 pct in 2009 - Antaike

SANYA, China (Reuters) - Consumption of primary aluminium in China, the world’s top consumer, may rise 8.5 percent this year and just 3 percent next year due to the global financial crisis, a senior analyst at Antaike, a state-owned research group, said.

The expected growth rates would be the lowest in years and mark a sharp fall from a more than 30 percent rise in 2007.

“Consumption is slowing due to the global financial crisis and weak performance of the local property market,” Wang Feihong told an aluminium conference in Sanya city on Hainan island.

“The Chinese market will have a surplus and prices will fall,” he added.

Antaike sees China’s aluminium consumption rising to 13 million tonnes this year and 13.4 million tonnes in 2009.

The country will still have a surplus, even though aluminium smelters have cut production.

Wang said about 1.5 million tonnes of aluminium smelting capacity might halt production by the end of this year, given weak domestic demand and low prices. He added start-ups of about 2.2 million tonnes of new capacity would be delayed.

Production cuts and output disruptions by the weather and electricity issues earlier in 2008 would trim the country’s metal output by at least 1 million tonnes this year, he said.

Antaike expects China’s primary aluminium production to rise 10.6 percent this year versus a third last year, to 13.9 million tonnes, although capacity is still likely to rise nearly 20 percent to 18.2 million tonnes.

Wang said the production cuts and weak demand would extend to 2009 and that would discourage smelter production, which could keep the metal output flat in 2009, for the first time in years.

With production of aluminium having slowed, the output of alumina, the main input for the metal’s production, is also falling, Antaike analyst Zhu Yan told the same conference.

Antaike predicts China’s alumina production would rise 21 percent on the year to 24.6 million tonnes this year, and inching up just 1.8 percent to 25 million tonnes next year. Output surged by a half in 2007.

Capacity of alumina is expected to rise 24 percent on the year to 33 million tonnes this year after having surged nearly 40 percent last year. But the capacity is unlikely to rise much in 2009 as demand falls.

Editing By Keiron Henderson

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