TOKYO - Global aluminum production may outpace demand this year by more than predicted because of expansion led by China, the biggest supplier and consumer, said Japan's third-largest trading house.
The company increased its forecast because output in China "appears to be greater than we expected earlier this year", Motoi Kamitani, Sumitomo Corp's manager of light metal trading, said in an interview in Tokyo on Aug 20.
Aluminum, used in cars, packaging and homes, has dropped by 7.9 percent in London this year as world supply exceeded demand by 314,000 metric tons, according to the World Bureau of Metal Statistics on Aug 18. Prices jumped 45 percent in 2009, the first annual advance in three years, as stimulus measures lifted the global economy out of its worst recession since World War II.
Sumitomo predicts a surplus of 2.5 million tons for 2010, up 32 percent from its January estimate of 1.9 million tons and compared with 1.8 million tons in 2009, Kamitani said. Supply may exceed demand by 2.3 million tons next year, he said.
Aluminum production in China may jump 29 percent from last year to 17.4 million tons, or 5.5 percent more than the January estimate, he said. Demand may increase 21 percent to 17.3 million tons, or 4.8 percent more from January, he said.
The country has produced 1.3 million tons to 1.4 million tons a month since the second half of last year as prices advanced, up from 800,000 to 900,000 tons a month in the first half of 2009, he said. "There's still room for a further increase as the country has an annual capacity of 20 million-22 million tons," he said.
Importer in 2012
From 2012, China may turn into a net importer as demand outstrips production and domestic stockpiles drop, Kamitani said.
Auto sales in China, the world's biggest market, may climb to 16 million this year, the China Association of Automobile Manufacturers said on Aug 10, boosting its prediction from a previous estimate of 15 million. The State Information Center said in April auto sales may jump 17 percent to 16 million from a record 13.6 million in 2009.
Demand in Japan, Asia's largest importer, may expand 17 percent to 2 million tons this year from 2009, a level 7 percent above the January estimate, he said. Usage increased in the auto industry after a subsidy program exempted purchases of electric, hybrid, natural gas and some diesel vehicles from taxes. Information technology exports also increased, he said.
Aluminum buyers in Japan may win a cut in fees from major suppliers for October-December as charges for immediate delivery drop to $110 a ton and traders may be forced to sell the metal amid rising costs to maintain stockpiles, Kamitani said.