During 2016, a total of 2.8mtpy newly built primary aluminium capacity came online in China with the majority situated in Shandong and Southwestern China.
In Shandong, 2.4mtpy new primary aluminium capacity came online in 2016, which accounted for 86.7% of the total new capacity, ranking first nationwide. In Guangxi, 350ktpy new capacity commenced, representing 13.6% of the total new capacity. There was no greenfield or brownfield primary aluminium project development in Xinjiang during 2016 for two reasons: 1) Local primary aluminium smelters were laden with debt and were mired in financial strain. 2) Transportation bottlenecks and higher freight costs increased the purchasing costs for raw materials and held back sales of primary aluminium, which led to tightening liquidity and dampened commencement of new primary aluminium projects.
Two large primary aluminium smelters (Xinfa and Weiqiao) in Shandong will continue to bring more new primary aluminium capacity online in 2017, expected to be 2.7mtpy. Also in 2017,a wave of commencement of new primary aluminium capacity will take place in southwestern China and Inner Mongolia.
MMI Price at posting:
14.0¢ Sentiment: Buy Disclosure: Held
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