Henan's Aluminum Smelters Cut Production by over 400,000 Mt

SHANGHAI, Apr. 12 (SMM) -- SMM sources report that some aluminum smelters have been suffering losses due to weak aluminum prices, and aluminum smelters in Henan Province have cut production by over 400,000 mt since China raised the price of electricity for non-residential use in 2011.

Although many aluminum smelters have suffered losses since 4Q 2012, few smelters cut or suspended production since production stoppages are costly for aluminum smelters. Industry insiders even said smelters will maintain production despite losses.

Aluminum smelters in Henan have cut production by over 400,000 mt since the electricity price hike on December 1, 2011, and more production cuts are still in progress.

SMM sources report that the 400,000 mt production cuts were seen at many smelters. Some aluminum smelters stockpiled goods while cutting production in an attempt to reduce market supply of aluminum ingot amid slightly improving downstream orders and huge spot aluminum inventories.

In addition, current downstream consumption of aluminum is still weak, and whether or not demand recovery can be sustainable remains to be seen.