Growing New Aluminum Capacity to Exacerbate Already 5.5 Mln Tonne Supply Glut in China

SHANGHAI, Aug. 27 (SMM) – China’s aluminum market is in surplus by approximately 5.5 million tonnes at present, and this situation will only get worse in H1 2015 as more capacity come on stream, www.cnal.com reported.

About 1.8 million-tpy aluminum capacity is expected to enter into service in the second half of the year, www.cnal.com estimates. 

New aluminum capacity concentrates in west China, where over 2 million tonnes capacity was newly built in H1 2015 alone. West China contributes to about 60% of the country’s aluminum production, and local operating rate is as high as over 90%. Most smelters there have captive power plants and enjoy lower power tariffs, allowing their production costs to stay low at 8,000-9,000 yuan per tonne, www.cnal.com said.   

High-cost smelters in other parts of the country have cut or ceased production against falling aluminum prices. However, the scale of production cuts is too small, considering how much more capacity is coming online to fill the gap.  

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