Aluminum industry pulled into losses

Yunnan Aluminum Co Ltd, one of China's largest manufacturers of aluminum products, suffered a deficit of 146 million yuan ($23.35 million) for the year to date through September, down 238 percent from the same period last year, according to a report released by the company late Wednesday.

Yunnan Aluminum's recent loss reflects the worsening operating conditions in China's aluminum industry - which contributes roughly half of the world's output of the light metal - as mounting production expenses and falling retail prices squeeze the nation's smelters, experts told the Global Times Thursday.

Surging raw material costs, especially for imported bauxite, combined with growing electricity prices have raised the production overhead of aluminum makers across China this year, Zhang Fang, a nonferrous metal analyst at China Securities Co Ltd, told the Global Times.

Statistics from China's customs authority show that the average price of imported bauxite rose from $348.23 per ton in August to $351.19 per ton in September.

Meanwhile, the cost of electricity for enterprises in China's secondary sector has gone up by an average of 0.03 yuan per kilowatt hour nationwide since the beginning of this year, according to information from the National Development and Reform Commission.

But while it becomes more expensive for domestic aluminum makers to keep their operations running, most smelters have not slowed down production in order to comply with growth targets outlined in a recent five-year development plan for the industry, raising concerns about overcapacity as demand for the light metal falls among automakers, construction firms and electronics manufacturers, Wei Qining, a nonferrous metal researcher at CIConsulting, a China-based industry research institution, told the Global Times.

Chinese smelters produced 13.08 million tons of electrolytic aluminum in the first eight months, up 10.66 percent year-on-year, faster than any other segment of China's nonferrous metal sector, data from the China Nonferrous Metals Industry Association show.