China Holds 600,000 Tons of Aluminum, Triple Known Inventory

Aug. 26 (Bloomberg) -- Aluminum Corp. of China Ltd., the country’s largest producer, said Chinese smelters, traders and warehouses hold as much as 600,000 metric tons of inventories because of surplus output. Privately held inventories would be equal to two-and-a-half weeks of forecast Chinese demand this year, according to figures from Chalco, as the company is known. It’s also three times more than the reported stocks held by Shanghai Futures Exchange warehouses. “The biggest pressure for the aluminum industry is excessive capacity,” Chalco President Luo Jianchuan told reporters in Hong Kong today. “Both alumina and aluminum producers have stepped up the pace of restarting idled plants since the second quarter.” Smelters in China, the world’s biggest producer, are adding to a global surplus as they restart plants after prices surged 30 percent this year. Aluminum in warehouses monitored by the London Metal Exchange has quadrupled in the past year to a record 4.6 million tons. “It would take three years to turn China’s aluminum market from a surplus to a deficit, along with an economic recovery and demand improvement from users such as builders, automakers and power producers,” Chairman Xiong Weiping said at the same conference. Improving Consumption Producers are “confident” that consumption, especially from builders, will improve, Luo said. Stockpiles monitored by the Shanghai Futures Exchange rose 9 percent to 198,363 tons, the exchange said Aug. 21. Apart from the privately held stocks, the country’s State Reserve Bureau bought 570,000 tons from domestic smelters this year, Luo said. Chalco accounted for about 65 percent of the metal purchased by the bureau, he said. The bureau won’t sell the metal “in the short term,” Luo said. Chalco fell 1.3 percent to close at HK$8.92 in Hong Kong trading. In Shanghai trading, it dropped 0.5 percent to 15.06 yuan. The Beijing-based company posted a third straight quarterly loss on Aug. 24.