Demand for primary aluminium will reach 70 million tonnes by 2020, according to Ron Knapp, Secretary General of the International Aluminium Institute. This represents an increase of about 3 million tonnes from a year ago.

Since global aluminium demand is growing at a rate of 4% per year, an additional 3 million tonnes per year of primary metal production is required, Knapp added.

Xu Yongqi, a senior director in the non-ferrous research department of Citic Futures, was also optimistic about near-term trends in aluminium consumption.

Xu expects consumption outside China to reach 29.88 million tonnes in 2018, a year-on-year increase of 2.5%, and demand outside China to increase by 7% to 37.99 million tonnes this year.

“The supply deficit outside China in 2018 is likely to widen from 2017,” Xu added.

The high aluminium price is providing an incentive to restart idled aluminium operations and bring onstream new capacity.

Alcoa, for example, is mulling the restart of idled aluminium and alumina capacity, a leading executive said in April, adding that high prices and the expectation of a sizable deficit in both markets this year is the driver of such moves.

The uncertainty resulting from the prospects of a trade war between China and the United States and US sanctions on Rusal has pushed the aluminium price on the London Metal Exchange to a multiyear high in April - it peaked at $2,718 per tonne on April 19.

Although the price has softened since the US allowed more time before enforcing sanctions on Rusal, it is still hovering around $2,250 per tonne - a relatively robust level compared with the past few years.

The most-traded July contact price on the Shanghai Futures Exchange closed at 14,595 yuan per tonne today. Despite dropping from 15,650 yuan per tonne on April 19, it remains around 15,000 yuan per tonne, up from a low of 13,790 yuan per tonne on March 30.

“If aluminium prices hold above 15,000 yuan per tonne for a long time, it would stimulate more new primary aluminium capacity,” Xu said.

Another incentive for ramping up production in China is a decline in stocks, which suggests an easing in oversupply. Aluminum stocks on the SHFE stood at 983,816 tonnes as of May 18, a week-on-week drop of 8,207 tonnes and down from 993,207 tonnes on April 20 - the peak so far this year.

“The optimistic estimation is that from March to May consumption in China will reach 9.5 million tonnes and supply will be 9.25 million tonnes, which will lead to a decrease of stocks of 250,000 tonnes,” Xu said.

According to Chinese smelters’ plans, around 2.08 million tpy of capacity will enter operations between March and May, though around 530,000 tpy of this total might be postponed, Xu told delegates.