Most domestic primary aluminium smelters are taking measures to mitigate loss, including building up aluminium inventories or mortgaging aluminium produced in the wake of deeper losses and increasing liquidity pressures. Aluminium smelters in developing areas – where aluminium smelting is crucial to local economic development – are in discussion with local governments for support with electricity and coal prices in a bid to reduce overall production costs and reduce losses.
According to Aladdiny, an increasing number of aluminum smelters will cut operations or run maintenance ahead of schedule to lessen losses. Some small, un-integrated, high-cost, low competition producers will take the lead in cutting or suspending operations. Aladdiny takes the view that as long as the COVID-19 pandemic continues to weigh on demand, measures taken by smelters such as hoarding, mortgaging, seeking local government support and cutting/suspending operations will be temporary methods to be taken in the short term.