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Through the end of November Bao Alumium Group had produced a total of 210,000 MT of aluminum, a 15.57% increase over the same period of a year ago. For the whole year Bao Aluminum expects to produce a total of 231,300 MT.
Some aluminum industry analysts have predicted that in 2005 primary aluminum prices will rise 15%, that China will become a net importer of aluminum again and that total net imports in 2005 could be as much as 700,000 MT. These experts are predicting that for the first time in ten years primary aluminum may be selling for $2000/MT. The elimination of the 8% rebate on VAT taxes and the imposition of a tariff on exported aluminum (there is one report speculating that there will be a 5% export tariff on unwrought aluminum) are expected to lead to a decline in new aluminum smelter capacity next year and a further acceleration of the scrapping of uncompetitive smelters; there are some suggestions that the Chinese government will force underperforming aluminum smelters to close next year. Other analysts opine that despite these developments China will continue to export large quantities of primary aluminum. Yet another view is that the "losses outweigh the benefits" because increasing exports of aluminum (1) really means increased exports of power, which is in short supply in China, and (2) will lead to greater inflows of foreign exchange, which in turn will increase pressure on China to adjust the exchange rate of the Yuan.
Corresponding to the large increases in stocks of primary aluminum in LME warehouses in Singapore, in anticipation of the change in the export rebate of VAT taxes, there has been a large decrease in the stocks of primary aluminum in the SHFE, from 99738 MT as of 12/3 to 66560 MT as of 12/24.
Bauxite and Alumina
The Guizhou branch of Chalco will produce a total of 850,000 MT of alumina for all of 2004.
Through December 23 rd Henan Province had banned 249 small bauxite mines which did not have licenses to operate.
Analysts with Antaike Information Development Co. are predicting that there will be a large drop in consumption of aluminum in 2005 because of a noticeable slowdown in building activity and a decline in purchases of cars. Other analysts continue to predict that Chinese domestic aluminum consumption will grow at a rate of 10%/annum for next three years and that by 2008 China's consumption of aluminum will have grown from 6 million tpy this year to 9.3 million tpy.
International Aluminum Trade
Total Exports Jan-November, 2004 (MT)
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