China Alumunium Smelters Production Idle Due Low Prices

One of Commodities in China, alumunium smelters of China's top aluminium producing province, Henan, have idled around 700,000 tonnes of primary aluminium capacity since June, more than 15 percent of the total annual capacity of 4.6 million tonnes due to low prices at the time in China, and the provincial government did not restrict power supplies to the operating smelters. Aluminium smelters in Guizhou, one of China's major primary aluminium producing provinces, have been ordered to cut production, in efforts to help meet Beijing's target to reduce energy intensity, smelter officials said on Monday. Chinese aluminium prices were unlikely to rise sharply from current levels unless the two top producing provinces Henan and Shandong cut power supplies to local aluminium smelters, thanks to expanded capacity and high aluminium stocks in the country, Heng estimated. ($1=6.71 yuan).

Aluminum smelters were also barred from starting up new capacity and reopening capacity that had been idled, he said, adding the provincial government would review the policy after October. A 250,000-tonne-a-year smelter in Zunyi started closing a 60,000-tonne production facility on Sunday and that capacity is unlikely to be reopened for the rest of the year, an official at the smelter said. China's top aluminium producer, Chalco, has two plants in Guizhou, and two company spokeswomen were not available to comment. Heng at Essence said the Guangxi government was also cutting power supplies to local aluminium smelters this month. He estimated less than one million tonnes of China's 21.5 million tonnes of annual aluminium capacity had idled, including the closed capacity in Henan.

Chinese aluminium prices AL-A00-CCNMM have risen one precent this month to 15,400 yuan ($2,295) per tonne on Monday. Beijing aims to phase out a total of 339,000 tonnes of outdated aluminium capacity this year and is encouraging local governments to limit electricity supplies to power-hungry smelters as it tries to cut energy intensity 20 percent from the 2005 level by the end of this year.