China restarts smelters looking at high aluminium prices

The aluminium market which has been in surplus over the past few years is doing exceptionally well this year, with a climbing LME price and a healthy demand. Much of that has been achieved by global production cutbacks adopted by all the big names in the industry.

Now with the aluminium prices at a considerably high and a possible deficit in the global market, Chinese smelters are considering restarting some of their idled smelters.

The aluminium benchmark price has increased by 27 percent over the first seven months of the year reaching an 18-month high by the end of August and although the prices have eased since then, they are still a healthy 10 percent higher this year.

A poll conducted in July by Reuters with the consensus median forecast of analysts have revealed there is likely to be a surplus of 235,500 tonnes this year and a deficit of 4,444 in 2015. Many suspected a deficit in this year as well but restarted smelters have changed the equation in the global scene.

In China, 1.3 million tonnes of annual capacity have gone back online and an additional restarts in the northern regions like Gansu province are expected pushing the yearly restart amount to 1.6 million tonnes per annum, said Richard Lu of AZ China in Beijing.

In August, the Chinese primary output rose 8.8 percent to 2.027 on a YOY basis, breaking the 2 million mark for the first time.