Reuters reported that China will likely curtail another 600,000 tonnes of aluminum smelter production before the end of 2010 to meet energy efficiency targets but whether they restart that shuttered production in 2011 remains to be seen.
Mr Klaus Kleinfeld chairman and CEO of Alcoa Inc said that "We believe, at this time, roughly 700,000 tonnes have already been shut down. We'll probably see 600,000 tonnes more shut down. China is currently scrambling to meet energy efficiency targets in 5 year plan ending in 2010.
He said that leads to very stringent measures in the provinces that have not yet reached those targets. We see that capacity in a pretty drastic way getting shut down. The question is how much of the idled capacity will come back on line after January 1. That's a question that is hard to answer. But I think one thing is for sure, not all of it will come back.
As for the global primary aluminum market, which has been running a supply surplus, Mr Kleinfeld said that he thought the demand gap had narrowed and the market was no longer oversupplied. The alumina market was running a balance and aluminum was still a bit oversupplied but at the same time, demand for aluminum was picking up.
He said that physical inventories in terms of days worth are going down. The surplus is going down. At the same time the metal has established itself as a separate asset class. Volatility among other financial assets had led investors to aluminum as an asset to help buffer against it.
（Sourced from Reuters）
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