INTERVIEW-China Shenhuo sees aluminium demand stable

* Aluminium demand seen little impacted by monetary policy

* Shenhuo's aluminium output to hit 700,000 T in 2010

By Rujun Shen and Tom Miles

BEIJING, March 8 (Reuters) - China's aluminium demand will remain stable this year despite a tighter monetary policy and excessive aluminium stocks, the chief of China's fourth-largest aluminium producer by capacity said in an interview.

"The tighter monetary policy isn't going to have huge impact on aluminium consumption," said Li Chong, chairman of Shenhuo Group .

"The government still hopes to keep the real estate and automobile industries stable, but not to curb their development."

The real estate industry alone takes up about 50 percent of the country's aluminium consumption, Li said.

After encouraging banks to hand out record-high loans in 2009 to stimulate economic development, Beijing has raised the percentage of cash banks must keep in reserve twice since the beginning of the year, showing its intent to curb lending and inflation.

But China's Premier Wen Jiabao said last week Beijing could maintain an appropriately easy monetary stance and an active fiscal policy.

Shenhuo plans to raise aluminium output by more than 50 percent from a year earlier to 700,000 tonnes in 2010, and output of alumina is expected to reach 600,000 tonnes, as capacity idled last year returns to production.

"We are certainly worried about the overcapacity and high aluminium stocks," said Li. "The capacity is overhanging -- I don't expect aluminium demand to improve much in the short term."

Li however is encouraged by the trend in aluminium prices.

Three-month aluminium prices on the London Metal Exchange  rose nearly 50 percent in 2009 to $2,230 a tonne, and traded at $2,248 by 0758 GMT on Monday.

The group, parent of Shenzhen-listed Henan Shen Huo Coal Industry and Electricity Power Co , has increased its annual aluminium smelting capacity to 920,000 tonnes in the past 5 years as it acquired smaller smelters in Henan, China's top aluminium producing province.

Aluminium stocks in warehouses registered with the Shanghai Futures Exchange hit an all-time high  of more than 376,000 tonnes last year, having tripled in just under a year. LME aluminium stocks are also near a record high.

COAL OUTPUT TO GROW, COKING COAL TIGHT

Shenhuo Group also has total coal production capacity of slightly over 10 million tonnes, and produces mostly coking coal used in steel production.

Even though China is the world's largest coal producer and consumer, churning out about 3 billion tonnes of raw coal in 2009, its resource of metallurgical-grade coal is relatively scarce and of inferior quality.

"The overall coal output will continue to grow, mainly from provinces like Xinjiang and Inner Mongolia. But these provinces do not have coking coal resources," said Li, adding that China's coking coal production is probably nearing its peak.

China imported 4.758 million tonnes of coking coal in January, up 36 percent compared to the previous month, after the country's coking coal imports in 2009 soared more than 400 percent from a year earlier.

Shenhuo is doing a feasibility study of a wholly-owned thermal coal mine in Australia with a projected annual production capacity of 4 million tonnes, and expects mining to start around 2013-2015, Li said.

(Editing by Ed Lane)