SOME Chinese aluminum producers that shut smelters during a winter crackdown on pollution may not reopen this spring once output curbs are lifted, as planned new capacity by State-run companies threatens to overwhelm demand and cut into profits.

China, the world’s biggest producer of aluminum — used in aeroplanes, cars and beverage cans — ordered smelters in 28 of its smoggiest northern cities to cut output by 30 percent from mid-November to mid-March. That affected an estimated 1 million tons of annual output.

Record stockpiles and weak aluminum prices, which are down almost 10 percent since mid-November and hovering near breakeven levels, have caused smelters from Shandong to Shanxi to take a pause as the end of winter approaches. But they also face extra competition from new, mostly State-owned smelters in regions not subject to output curbs.

Some 3 million-4 million tons of new capacity is set to come on line this year, or about 10 percent of the country’s current output, according to a survey of analysts.

That’s roughly equivalent to adding the production capacity of Russia’s Rusal, the world’s second-biggest aluminum producer, to a bloated Chinese market whose overcapacity has riled the United States.

That means squeezing out small, private companies.

China’s State-owned producers “are going to become bigger and bigger and probably more powerful in the industry,” said Jackie Wang, an analyst at CRU, a commodities consultancy.

A limited restart may boost Chinese efforts to eliminate excess capacity via supply-side reform, which is one of the main themes of the annual meeting of the National People’s Congress.

But the new capacity, which far exceeds the amount cut over the winter, is also likely to send shivers across the global market and add pressure to international prices.(SD-Agencies)