China aluminium sector restructuring, govt measures to sustain industry - Fitch |
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Tue, 22 May 2007 08:01
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BEIJING (XFN-ASIA) - Fitch Ratings said government measures to curb the further rollout of smelting capacity, along with consolidation moves led by Aluminum Corp of China Ltd (Chalco), will ensure the Chinese aluminium industry is well placed for long term organic growth.'Following the severe overcapacity of aluminium smelters since 2003, the austerity measures implemented by the Chinese authorities to curb further irrational capacity expansion have proven to be effective in contributing to a relatively balanced global supply and dynamic demand for primary aluminium,' Fitch corporates team associate director Danny Chen said in a research note.He noted that mergers and acquisitions (M&As) in the industry will revolve around Chalco, given its leading market share, good capital market access and adequate government support.'Chalco's leading role is 'positive' in the process of consolidation for China's aluminium producers, which will largely improve the industry's capacity utilization and reduce fragmentation. The consolidation will also provide the major market participants with improved integration between upstream bauxite, refining and downstream smelting operations, thereby enhancing the fundamental structure of the Chinese aluminium industry and supporting its future healthy development,' Chen said.Chalco recently acquired stakes in its two mainland listed units -- Shandong Aluminium and Lanzhou Aluminium, and aims to buy three more smelters -- Baotou Aluminium, Liancheng Aluminium and Tongchuan Xinguang Aluminium -- from its parent.The consolidation will expand Chalco's primary aluminium capacity to 3.4 mln tons in 2007, representing a 25 pct year-on-year increase and accounting for around 35 pct of the Chinese domestic market. Chalco, is currently rated 'A- / Stable' by Fitch.andrew.pasek@xinhuafinance.com
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Primary aluminium market records surplus in first two months of 2007 