Will Recent Aluminum Price Rise Trigger Massive Capacity Restarts in China?

SHANGHAI, Mar. 7 (SMM) – Aluminum prices have been rising steadily of late. Are current prices attractive enough to trigger massive capacity restarts in China?

Current aluminum prices are still below costs at most of those aluminum smelters that closed earlier, SMM aluminum analyst Liu Xiaolei said. The pace of restarts will depend on how aluminum prices and costs change in the future, Liu added. 

In fact, several large smelters that cut production in December 2015 said they have no intention of bringing idled lines back online. This is because it costs a lot to do so and aluminum prices have yet to recover to their cost lines. 

It appears that there is a higher possibility for aluminum smelters in northwest China to resume capacity. Smelters in Qinghai have obtained about 0.1 yuan/Kwh preferential power tariffs this year, greatly reducing their power costs. One smelter in Ningxia plans to bring some capacity back into operation in March, SMM has learned.

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