China’s aluminum consumption to rise 9-10%

Demand rate for the metal to outpace GDP growth in 2018: Chinalco

China’s biggest State-run aluminum producer said consumption of the metal is set to increase by 9 to 10 percent this year on the back of strong downstream demand and to keep growing at a faster rate than the country’s GDP in 2018.

Ge Honglin, chairman of Aluminum Corp of China, also known as Chinalco, told Reuters in an e-mail reply that consumption was expected to come in at 26.25 million tons in the first three quarters of 2017, up 9 percent year-on-year, with the peak demand yet to come at the end of this year.

The chairman said Chinalco expects national aluminum consumption growth “will continue to be higher than GDP in 2018 and the consumer demand will remain huge for the healthy development of the global aluminum industry.”

China, whose GDP growth target is around 6.5 percent for this year, has not yet set a GDP goal for 2018. But the IMF sees China’s GDP climbing by 6.5 percent in 2018.

Some of Chinalco’s rivals, such as China Hongqiao Group based in East China’s Shandong Province, are facing restrictions on smelting this winter for environmental reasons.

But when asked how his company could be affected, Ge mentioned only cutbacks in processing of alumina, a substance used to produce aluminum in Shandong Province and Central China’s Henan Province.

Aluminum demand from China’s packaging sector was up by 20 percent during the January-September period, according to Ge, while demand from real estate, transportation and electronic products grew by 8 percent and from the power sector by 5 percent, he said.

When asked about Chinalco’s proposed purchase of another 46.6 percent stake in its Simandou iron ore project in Guinea from global miner Rio Tinto – a deal that has still not closed despite being agreed a year ago – Ge said only that his company’s projects in the country were “progressing smoothly”.

Chinalco’s listed arm, known as Chalco, in September agreed to invest $500 million in a project to process bauxite, used to produce aluminum, in Guinea.

Trading in Chalco’s Shanghai-listed shares has been suspended since September 12. Ge said further announcements would be made in due course.