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Commodities

Norsk Hydro: China to boost aluminium output by up to 9 pc in 2017

China accounts for half of world’s aluminium production

PUBLISHED : Friday, 10 February, 2017, 2:58am
UPDATED : Friday, 10 February, 2017, 2:58am

Norway’s Norsk Hydro, one of the world’s top aluminium makers, said on Thursday it was unclear whether China would cut production this winter to battle smog and that it expected the country’s aluminium output to rise by up to 9 per cent this year.

Expectations that Beijing will scale back production to improve air quality from November have helped drive aluminium prices to 20-month highs.

But Norsk Hydro chief executive Svein Richard Brandtzaeg said that was far from certain.

“We have heard similar signals before (from the Chinese government) without necessarily seeing dramatic changes,” he said in an interview.

If implemented, the cuts would take place against the backdrop of rising Chinese capacity, as new energy efficient production comes on line and rising prices entice smelters that shut down in 2015 to restart. China accounts for around half the world’s aluminium production.

Norsk Hydro said it expected Chinese primary aluminium output to increase by 7-9 per cent this year after growing 3.7 per cent in 2016.

“The ramp up of new capacity continued in the northwest regions (of China), in Shandong in the east, in Guizhou in the south east of China and in Inner Mongolia in the north,” Norsk said in a statement.

Chinese demand meanwhile would grow by 4-6 per cent this year after rising 7.4 per cent in 2016, Norsk said.

Norsk said it expected China to have a 1.5 million tonne surplus of aluminium this year, offsetting a deficit of 1.5 million tonnes elsewhere in the world.

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