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Chinese aluminum sector in severe overcapacity

Reuters reported that China aluminum industry faces severe overcapacity with the total smelting capacity at about 20 million tonnes exceeding demand by 7 million tonnes.

The Ministry of Industry and Information Technology said that the nonferrous metals industry will have to curb the excessive expansion in smelting capacity and phase out outdated capacity.

The ministry said that after a rough start in 2009, the metals industry turned around quickly thanks to demand boosted by China's massive stimulus package. In 2009, fixed asset investment in the metals industry grew 16.5% from a year earlier to CNY 272 billion slowing down from 40.9% expansion in the previous year.

Meanwhile, the ministry said that it plans to remove administrative obstacles to make firms that belong to different regions and types of ownership merge more easily.

(Sourced from Reuters)