About one-third of the aluminum capacity in China is likely to lie idle in 2012, hitting a record high since 2009, due to the rising energy cost and falling prices of aluminum, according to media reports.
China's aluminum output is estimated to reach nearly 20 million metric tonnes in 2012 and the aluminum capacity would not exceed 30 million tonnes by the end of 2012, said Luo Rongjin, an analyst with the BOCOM International.
The country's aluminum output in November 2011 went down 8.3 per cent from the record high of 1.6 million tonnes in August 2011.
Aluminum price decreased 19 per cent year on year in 2011, resulting in the falling profits of metal producers worldwide. In face of the gloomy global market and worsening operating environment, leading aluminum producers in the world have started to cut capacity, including Alcoa Inc and Rio Tinto Alcan.
Peter Hickson, an investment strategist on global commodities with the United Bank of Switzerland (UBS) noted that many aluminum producers in China incurred losses in 2011 due to the rise of electricity price, which reduced the competitiveness of country's aluminum industry. China had 6 million tonnes of aluminum overcapacity in 2011 and 1-2 million tonnes of the capacity would likely lie idle in 2012, he said.
Klaus Kleinfeld, CEO of the Alcoa Inc, said that China is likely to shut down 1.1 million tonnes of aluminum capacity in 2012.
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