China plans to step up elimination of obsolete aluminium plants

China's government aims to "vigorously" eliminate obsolete aluminium capacity in 2013 through economic measures such as differential power rates.

The decommissioning of technologically backward smelters is a key work area in 2013, the ministry of industry and information technology (MIIT) said in a base metal industry outlook report issued on Saturday February 16.

Economic measures such as power rates differentiation will be studied and employed so as to raise production input costs to impel obsolete smelters to exit the market, the ministry said.

In addition, the authorities aim to accelerate the introduction of new entry requirements for aluminium industry, MIIT said. Entry requirements for secondary aluminium producers were drafted earlier in the year.

China had 27.65 million tonnes of aluminium capacity at the end of 2012, with utilisation rates at only 72%, the ministry noted in the report.

Only 45% of the total capacities are operated with self-run power stations while those relying on the state grid’s power are deeply in the red, it added.

"Impetus for a noticeable recovery in demand in the base metals industry remains lacking,’’ MIIT said in the report. The ministry added that it expected metal prices to remain range-bound this year, with periodic recovery opportunities depending on global monetary easing and China’s investment policies.