China’s primary aluminium restarting capacity as prices rebound

The aluminium smelters in China are restarting a few idled capacities after aluminium prices rebounded in March after remaining low for five years. According to industry sources, the smelters are also taking advantage of low power costs given to them by a province located in Southwest. These capacities after their restart would also help in generating high exports of primary aluminium as well as its products resulting in a rise in the global market.

Since 2009, oversupply of primary aluminium has bring down the domestic prices of the metal in China and this has resulted in high losses of smelters forcing them to shut down their high-cost capacity. Aluminium on LME had reached down the lowest in four and half years.

Between late 2013 to end of April around 2 mn tons of smelting capacities have closed down in China, Xinhu Futures analyst as well as research firm Antaike had estimated."About a quarter of the 2 million tonnes of closed capacity could be restarted in coming months," said an executive at a state-owned smelter. He did not want to be named as he wasn’t authorized to speak to the media.

Antaike's analyst Guo Qiuying and Xinhu's analyst Xu Hongping also expected some 500,000 tonnes of idled capacity to start production before end of 2014.

Aluminum Corp of China Ltd , the top producer in the country, had reported a net loss twice for the first quarter last year. But the cut in the number of capacities along with now firmer prices on LME have helped Chna’s aluminium market to rise with spot metal up by 8% from March.

It is expected that prices will rise as the prices of raw material have gone up due to mineral ban in Indonesia.