China Hongqiao chief dismisses aluminium overcapacity concerns

China Hongqiao, the world’s largest aluminium producer, rejected concerns the Chinese aluminium industry has a major overcapacity problem and that prices of the metal may fall due to the supply overhang.

Chief executive Zhang Bo said China’s high demand for the lightweight industrial metal and improving “self-discipline” in production and capacity expansion has already resulted in a much healthier state than some analysts’ believe.

The nation accounted for 53 per cent of the global demand of 30 million tonnes in the first half of the year.

Asked if he agrees with an analyst’s view that aluminium prices may fall 11 per cent in the next four years amid oversupply, Zhang said on Monday: “Our view, and also the view of our industry’s association is that, given the industry’s overall plant utilisation exceeds 80 per cent, and over 80 per cent of the smelters are profitable, nobody [should] have the idea that the industry is in major overcapacity.”

He also noted mainland China’s 8.6 per cent year-on-year first-half aluminium demand growth has far outstripped output growth of 1 per cent, which has “made a great contribution” towards restoration of the global industry’s demand-supply balance and price recovery.

Zhang expected the transportation, electronic and electrical industries to continue to lead demand growth in the mainland.