07 JUNE 2013Financial Times
Aluminium rallies on signs of output cuts
Edited by : AL CIRCLE
2 min read
Aluminium rallied to the highest level in more than two months amid signs that smelters were finally beginning to respond to low prices by shuttering production capacity in scale.
On Wednesday, Chalco, the Chinese state aluminium giant that is one of the world’s top producers of the metal, announced that it planned to close down temporarily 380,000 tonnes of production capacity – or a tenth of its total output.
In a filing, the company said it had decided “to exercise flexible production on part of its aluminium production line” as a result of “current market conditions”.
Aluminium prices have been hovering at three-year lows for most of the past 12 months as the market struggles with plentiful supplies and high inventories. At the average price so far this year of just under $2,000 a tonne, analysts believe that a large proportion of the global aluminium industry is struggling to make money.
Aluminium traders and analysts said Chalco’s move appeared to be part of a more concerted push by the Chinese aluminium industry, which has the highest cost of production in the world, to close down unprofitable plants in the hope of propping up prices.
According to one trader, the China Non-Ferrous Metals Industry Association last week organised a meeting of major smelters in Beijing with the objective of reaching a collective agreement to curtail production, leading Chinese traders to expect higher prices.
On Wednesday, Chalco, the Chinese state aluminium giant that is one of the world’s top producers of the metal, announced that it planned to close down temporarily 380,000 tonnes of production capacity – or a tenth of its total output.
In a filing, the company said it had decided “to exercise flexible production on part of its aluminium production line” as a result of “current market conditions”.
Aluminium prices have been hovering at three-year lows for most of the past 12 months as the market struggles with plentiful supplies and high inventories. At the average price so far this year of just under $2,000 a tonne, analysts believe that a large proportion of the global aluminium industry is struggling to make money.
Aluminium traders and analysts said Chalco’s move appeared to be part of a more concerted push by the Chinese aluminium industry, which has the highest cost of production in the world, to close down unprofitable plants in the hope of propping up prices.
According to one trader, the China Non-Ferrous Metals Industry Association last week organised a meeting of major smelters in Beijing with the objective of reaching a collective agreement to curtail production, leading Chinese traders to expect higher prices.
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