Will Aluminum Price Rally Slow Output Cuts in China?

SHANGHAI, Dec. 1 (SMM) – A staggering 4.06 million-tpy aluminum capacities in China have been or are planned to be cut so far this year, SMM statistics showed, as multi-year low aluminum prices have left more smelters in losses. 

Aluminum prices rebounded last week. But, the rally is too shallow to slow the pace of output cuts, SMM aluminum analyst pointed out.

In fact, costs of capacity idled are above 12,000 yuan ($1,876) per tonne, according to SMM data. More smelters will cut output if aluminum prices fall again. To say the least, even if aluminum prices return to above 12,000 yuan per tonne, there is little chance for idled capacity to come back online immediately, the analyst added. 

As for new capacity, the scale of new capacity in China is smaller than that of capacity cuts so far this year. Some smelters, unable to bear pain from tumbling prices, have decided to postpone commissioning of new capacity to next year, SMm has learned. 

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