China Nonferrous Metals News
Aladdiny: As of 30th March, domestic primary aluminium production cuts amounted to 400.3 kt (including uncompleted cuts). Of this figure, Chalco Shanxi New Materials made cuts of 70 kt and Dongxing Aluminium smelter cut production by 132 kt. Several large smelters in IM, Shandong and Yunnan are considering production cuts to suit their own short-term circumstances. Aladdiny take the view that more smelters will follow the move to production cuts during April.
Meanwhile, new capacity has been slow to come online, represented by Yunnan Shenhuo postponing its Phase II project. New smelter projects at Yunnan Wenshan and Yunnan Hongtai are scheduled to come online by end-April and end-August respectively, however whether the plans will be carried out as scheduled remains to be seen.
Domestic primary aluminium prices continue to drop. The weighted average full cost for domestic smelters was RMB13,335/t in March, showing a loss of RMB1,050/t for every tonne of aluminium produced with reference to average monthly spot market prices of RMB12,285/t – or a loss exceeding RMB1,800/t with reference to the current price at RMB11,500/t. Looking forward to April, aluminium production costs are likely to fall, in the wake of declining raw material costs (alumina, coal, and prebake anode costs). However, with aluminium prices estimated to be low – under RMB12,000/t during April – domestic smelters will remain in loss with potential to cut operations further.