Chinese analysts have long held the view that large global aluminium producers would swing into action and increase output. They have thus persistently brushed aside forecasts by foreign analysts that China's voracious demand for imports would drive up world aluminium prices.

Large global companies would not want to see prices run up to the level that would activate marginal production and accentuate the boom-and-bust cycle, one analyst said.

``The merger and acquisition that has swept through the metals industry enable a few large global companies to control world production and stabilise prices,'' the analyst said.

Alcoa said last week it would restart production of about 2,00,000 tonnes of currently idled aluminium smelting capacity over the course of the year. The goal ofaluminium producers was to give assurance of stable prices so that their customers would not switch to other metals, the analyst said.

The restart of Alcoa's idled aluminium capacity could put more uncertainty in alumina supplies, which Chinese smelters were starved of, industry sources said. ``If Alcoa restarts its smelters in Australia, it would use the alumina that is expected to be sold on the world market,'' an industry official said. The shortage of alumina that hit the Chinese smelters began last summer after the explosion at Kaiser Aluminium Corp's 100,000 tpy Gramercy plant. Spot prices of alumina more than doubled to over $400 per tonne from about $175 before the explosion.

Given the demand for alumina from Alcoa's restarted production, relief was unlikely until the Gramercy plant went back into production in the second half of the year, he said.

China imported an estimated 1.62 million tonnes of alumina in 1999, up about three per cent from the previous year.

So far no aluminium smelters inChina have been closed because of the alumina shortage. An analyst in Beijing said none of the 100 or more domestic aluminium smelters that report monthly output had posted zero production.

``It is understandable that smelters want to keep the tanks warm,''he said. ``Restarting each tank costs 300,000 yuan ($36,230). Multiplying by 10 or 15, the sum gets exorbitant.''

An official from Sino Mining, which imports alumina from Australia, also confirmed that no smelters had shut down.

The problem, however, was that reducing alumina feed and electric current made the output quality uneven, as the tanks operated at below the designed capacity, the Beijing analyst said.