SMM7, July 6: Chinalco (601600) issued the "notice of Chinalco on the flexible production of some Alumina production Lines" on the evening of July 5. The announcement said: affected by the market environment and other factors, Shanxi bauxite costs continue to rise, while alumina market prices continue to fall, in view of the above reasons, in line with the principle of maximizing benefits, Chinalco has decided to carry out elastic production of some alumina production lines of Chinalco Shanxi New Materials Co., Ltd. from the date of the announcement, involving the production capacity of alumina in elastic production of about 770000 tons.

Chinalco Shanxi new materials to implement elastic production is not surprising. Shanxi is rich in bauxite resources and is also one of the main production places of alumina. As early as 2014, Chinalco has taken measures such as reducing staff and increasing efficiency, continuously optimizing the management of operational efficiency and significantly reducing costs. In 2015, the company's electrolytic aluminum cost was on the high side of the industry, reaching the industry average in 2016, and further falling to the low-end 45% level in 2017.

In addition, yesterday, two other alumina enterprises in Shanxi also opened maintenance to reduce production, involving production capacity of about 780000 tons.

Alumina prices soared to 3135 yuan per ton in April as a result of a 50 per cent cut in Hydro's production and sanctions on Rusal's alumina sales. however, alumina prices have continued to fall since May 2 and have fallen 413 yuan per ton as of July 3. The decline was as high as 13.2 per cent. The main reason Rusal lifted sanctions, foreign alumina market panic dissipated, and during the period of Hydro or short-term resumption of production rumors accelerated the decline of foreign alumina.

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Looking to the future, SMM believes that in the short term in Shanxi Province, a number of alumina plants shut down maintenance and elastic production, alumina may stop falling rebound. The average price of alumina quoted by SMM on July 6 was 2728 yuan / ton, up 6 yuan / ton from the previous day.

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