Newssummary: Escalating China Aluminum Glut to Weigh Heavily on Prices in Q1 2015

SHANGHAI, Jan. 5 (SMM) – Oversupply in China’s aluminum market is expected to escalate in Q1 2015 on massive new capacities and falling demand, cnmn.com reported on January 2. 

 

Most new capacities came on stream in H2 2014. Nearly 3 million-tpy aluminum capacities in Xinjiang and at Shandong Weiqiao Group began to enter operations in September 2014, which will gradually reach full capacity in Q1 2015.  

 

On the demand side, many aluminum processors will not return to production immediately after the Chinese New Year holiday – February 19 this year – due to cash crunch and poor orders.

 

Moreover, power costs at aluminum smelters have fallen sharply, due to the flooding of new capacities in Xinjiang, growing use of captive power in major producing regions, such as Shandong and Henan, as well as falling thermal coal prices. Weakening cost support will drag aluminum prices down.