An increasing number of domestic aluminium smelters have cut operations or are advancing maintenance plan this week in the wake of negative profits in terms of average industry cash costs.
According to Baichuan Consultancy, a total of 330 ktpy of primary aluminum capacity will be cut in China as of 23rd March, including 240 ktpy which has already been reduced and 90 ktpy pending further notice. The six smelters involved in production cuts are:
- Shuozhou Resource Al of Shanxi Jinneng Group: 26 ktpy
- Liupanshui Shuangyuan Al in Guizhou: 30 ktpy, involving 50 set of 240kA cells
- Gansu Dongxing Jiayuguan smelter: 90 ktpy and Longxi smelter: 12 ktpy
- Chongqing Guofeng: 72 ktpy cut on short circuit of a converter, scheduled to resume operation in June after maintenance
- Chalco Shanxi New Materials: 70 ktpy (10 ktpy confirmed, 60 ktpy estimated)
- Huanghe Xinye: 30 ktpy (estimated)
According to Baichuan, most large primary aluminium smelters with low production costs are withholding their reduction plans and remaining watchful – waiting to see if prices rebound rapidly to RMB 12,000/t in the short-term. Meanwhile, small, high cost smelters are buckling under low prices, but are forced to maintain a minimum level of operations as production cuts or shut down would lead to long-term closures resulting in high resumption costs. Baichuan take the view that an increasing number of smelters will cut operations or run maintenance ahead of schedule if domestic aluminium remains low in the short-term.