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China's aluminum demand growth to stay ahead of GDP: Chinalco chairman
Published Oct 24, 2017 12:35AM ET
Updated Oct 24, 2017 12:40AM ET
© Reuters. FILE PHOTO: An Aluminium Corp of China (Chinalco) company flag and the Chinese national flag are seen outside its headquarters in Beijing
By Tom Daly
BEIJING (Reuters) - China's biggest state-run aluminum producer said consumption of the metal is set to increase by 9-10 percent this year on the back of strong downstream demand, and keep growing at a faster rate than the country's gross domestic product (GDP) in 2018.
Ge Honglin, chairman of Aluminum Corp of China, known as Chinalco, told Reuters in an emailed answers to questions that consumption was expected to come in at 26.25 million tonnes in the first three quarters of 2017, up 9 percent year on the year, with peak end-year demand yet to come.
The executive, a delegate at China's 19th Communist Party congress, said Chinalco expects national aluminum consumption growth "will continue to be higher than GDP in 2018, and the huge consumer demand will remain the ballast for the healthy development of the global aluminum industry".
China, which is targeting GDP growth of around 6.5 percent this year, has not yet set a 2018 goal. The International Monetary Fund sees China's GDP climbing by 6.5 percent in 2018.
Some of Chinalco's rivals, such as China Hongqiao Group, are facing restrictions on smelting this winter for environmental reasons.
But asked how his company would be affected, Ge mentioned only cutbacks in Shandong and Henan processing of alumina, a substance used to produce aluminum.
Rising prices of alumina, carbon and power have pushed up primary aluminum production costs by 14 percent this year, Ge said.
Aluminum demand from China's packaging sector was up by 20 percent in January-September, according to Ge, while demand from real estate, transportation and electronic products grew by 8 percent and the power sector by 5 percent, he said.
Asked about Chinalco's proposed purchase of another 46.6 percent stake in its Simandou iron ore project in Guinea from Rio Tinto (LON:RIO) - 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 Sept. 12 pending an event that a filing to the bourse stated may constitute a material asset restructuring. Ge said further announcements would be made in due course.
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