Macquarie Research says aluminium smelters in Henan province have been “persuaded” to restart their idled production capacity immediately in order to achieve local government GDP growth targets set for 2009. In return, the local government has offered smelters lower taxes and bank loan interest subsidies to ensure smelters remain profitable in the short term. “We estimate that a total of 500-600,000 t/y of idled aluminium smelting capacity has been put back on stream since end March in Henan province. There is another 800,000 t/y of unused new smelting capacity to be brought on line over the next three to six months at the request of the local government.”Alumina prices shave risen sharply on the spot market. Non-Chalco refiners have raised spot contract offers by Rmb450-550/t ($66-81/t) over the past week to a seven-month high of Rmb2,350/t ($344/t). Chalco also announced an alumina price increase of Rmb100/t ($15/t) effective from April 1 to Rmb2,300/t ($336/t).Macquarie has also seen “surprisingly bullish developments in the Chinese coking coal market, where prices have remained resilient above world levels, leading to a surge in imports. New capacity coming on-stream in the second half of 2009 may lead to Chinese prices falling below international benchmark levels but there is strong cost support above $100/t in China.