Reuters quoted the State Council said China will restrict new aluminium projects for three years and push for consolidation of base metals production.
This policy may affect a plan of Aluminum Corp of China Ltd which has asked Beijing for approval to add 250,000 tonnes of primary aluminium capacity at its Pingguo plant in Guangxi. The plant now has 140,000 tonnes of primary aluminium capacity.
The long-expected plan, a draft of which was published in February, will seek to have between three and five big firms by 2011, with the top 10 firms controlling 90% of copper production by 2011, 70% of aluminium, 60% of lead and 60% of zinc.
Mr Mark Pervan ANZ's senior commodities analyst said "These are generally positive initiatives. The plans for copper and zinc are very positive. The zinc market is especially fragmented and putting 60% of the industry in the hands of a few producers will mean a more disciplined supply response and may boost prices."
Mr Liu Qiang Chalco's spokesperson did not comment on the Pingguo's expansion plan. We just saw the document today. State-controlled Chalco is the country's top aluminium producer.”
The State Council, China's cabinet also said it would examine the case for further tax changes and more state stockpiling of base metals. It also confirmed targets to close outdated production capacity.
The plan published on the government website did not give details of the stockpiling tonnages but said the government would consider needs and study expanding of the reserve building plan to help smelters which are suffering from weak demand.
Mt Jia Mingxing Vice Chairman of China Nonferrous Metals Industry Association and president of state-owned research group Antaike said last month the three year reserve-building plan were to buy 1 million tonnes of aluminium, 400,000 tonnes of copper and 400,000 tonnes of lead and zinc from domestic smelters.
Smelter official said the State Reserves Bureau, Beijing's buying agency has bought 590,000 tonnes of aluminium and 159,000 tonnes of zinc since December. The state body may not buy more aluminium and zinc in the first half as the prices have surpassed production cost of many smelters.
Smelter officials and analysts said the state body has not bought copper from domestic smelters so far while it is believed to have contracted to import 300,000 tonnes of refined copper cathode of which about 200,000 tonnes had arrived Chinese ports in the first half.
The formal document indicated Beijing's plan to adjust export tax rebates that are for a local 17% value added tax on exports of high value-added metal products. It gave no details.
Mr Pervan said "The talk of rebates is little ambiguous. They don't seem to be saying whether they will be increased or decreased. In this climate you could probably assume an increase in rebates, but a decrease would kill off those less-efficient producers very quickly."
The association had suggested Beijing raise rebates on exports of all aluminium products to 17%.
(Sourced from Reuters)
