Aluminum prices in China, the world’s biggest producer and consumer of the metal, will remain high in 2021, the president of state-run Chalco said on Tuesday, as a crackdown on energy use in Inner Mongolia leaves a question mark oversupply.
Aluminum on the Shanghai Futures Exchange touched a 9-1/2 year peak of almost 18,000 yuan ($2,740) a tonne earlier this month after the Inner Mongolia city of Baotou ordered some industrial production and power plants to shut.
Inner Mongolia had earlier said it would stop approving new projects in industries that consume large amounts of energy, including aluminum smelters, to meet energy efficiency targets.
“Recently, Inner Mongolia has been affected by energy consumption controls. It is expected that new projects are less likely to be put into operation within the year,” Chalco President Zhu Runzhou said on an earnings call.
“Producing companies are even at risk at having to curtail output or reduce output,” he added.
Chalco, formally known as Aluminum Corp of China Ltd, has a smelting subsidiary in Baotou – Baotou Aluminum – but Zhu did not detail any impact on the unit.
Consultancy CRU previously estimated a total of 100,000 tonnes of annual aluminum production may be cut as a result of the Inner Mongolia restrictions.
Zhu nonetheless said he expects the aluminum market to be “basically balanced” in 2021, with steady growth in demand in traditional aluminum consumption sectors and potential growth in new areas.