China's aluminum industry is likely to see a capacity ceiling of around 45 million tonnes by around 2022 as a result of capacity-swapping policies, according to the latest report by Fitch Ratings.
The concept of capacity swaps was introduced in 2013, which only allows the building of new plants to replace existing plants' capacity by an equal or lower amount.
By the end of last year, Fitch estimated over 7 million tonnes of capacity quotas have changed hands under the policies.
The rating agency said the swaps would not have a meaningful impact on production levels in the near term as most of the capacity quotas swapped were from plants that were already idle due to high operating costs.
"However, we expect utilization rates to rise in the long term as the industry reaches a capacity ceiling, and production costs decline as low-cost replacement capacity enters the market," the report noted.
Source: Xinhua |
