China will phase out high-cost and outdated primary aluminum plants in two to three years, limiting capacity growth. The closures should help prices recover from a sharp drop of almost 30% in the past four years. “Demand and supply in China would be basically balanced in five years or more,” said Yu Dehui, Vice President in charge of the aluminum business at China Power Investment Corp (CPI), the second biggest producer of the metal in China. China is not likely to turn into a big importer of primary aluminum, he said at an industry conference in Hong Kong. Yu estimated China’s total primary aluminum capacity at around 40 million tons in about three years, indicating an annual growth rate of less than 10% from 31 million tons last year. This would be significantly below the yearly rise of about 20% seen between 2003 and 2012. The government pledged it would cut at least 420,000 tons of outdated aluminum capacity this year as part of a program aimed at closing obsolete, inefficient and polluting industrial facilities. Building of new capacity will also slow as heavily indebted local governments cut financial support for loss-making aluminum smelters. Chinese banks cut back on loans and pollution control efforts pick up pace, Wang Feihong, Senior Analyst of China Minmetals Non-Ferrous Metals, said.