China output raises fears for aluminum

The aluminum industry has been hit hard by the global economic crisis with sharp falls in sales across the automotive, construction and aerospace industries.

Prices have crashed, with the benchmark London Metal Exchange three-month contract dropping 62.2 percent, from a record $3,375 a ton in July of 2008 to a seven-year low of $1,275 in late February.

However, a recovery has emerged in recent weeks and prices are 18 percent off their lows. The concern in the industry now is that the nascent recovery could be nipped in the bud because Chinese smelters are busy ramping up production at a time when demand is continuing to fall.

As China accounted for around 35 per cent of global aluminum production and consumption last year, its supply and demand developments are of huge significance for the world market, according to an April 11 article in Financial Times.

Read full article