China Aluminum To Slide As Smelters Restart Production

BEIJING, Apr. 28 -- Aluminum prices will be under tremendous pressure in coming months on the back of large-scale production restarts, said a senior official with the China Nonferrous Metals Industry Association.

    "It's certain that we'll see a high season of production restarts in April and May given the current prices," said Wen Xianjun, vice chairman of the industry association, said in an industry conference over the weekend.

    The State Reserve Bureau's purchase of 59,000 mt of aluminum had helped support domestic prices, and the aluminum industry is now recovering from its previous lows, Wen added.

    Although massive production restarts across the country could lead to a narrowing of aluminum prices on the Shanghai Futures Exchange over those of the London Metal Exchange, the domestic market will soon be flooded with unwanted metal, which will consequently weigh on aluminum prices, Wen said.

    "Over the next three quarters, aluminum prices will still hover around its production cost, RMB 12,000-12,500/mt, and the aluminum industry will continue to face downward pressure on prices due to concerns about oversupply as new production comes on line," Wen said.

    (Source: Dow Jones)