Chinese aluminium production expected to drop in August; Chalco cuts prices after consecutive hikes

<p>Despite massive production cuts in July, China still has surplus aluminium in the market due to poor domestic consumption. SMM feels the oversupply will persist and aluminium stocks will continue growing in the long term due to new capacity that would be coming online in future.</p> <p style="text-align: center;"><img style="vertical-align: middle;" src="http://www.alcircle.com/uploads/images/chalco%20aluminium.jpg" alt="News" width="980" height="551" /></p> <p>China Aluminum International Trading Co. (Chalco Trading) has cut aluminium prices it offered across major markets today after hiking prices for three consecutive days.&nbsp;</p> <p>According to a statement filed by Chalco to the Shanghai Stock Exchange, aluminium market is facing uncertainties because of two factors. On the one hand, they feel, aluminium industry is benefitting from government policies, while higher power tariffs may push up production costs for aluminium which will lead to big volatility in aluminium market.</p> <p style="text-align: center;"><img style="vertical-align: middle;" src="http://www.alcircle.com/uploads/images/chalco%20price1.png" alt="News" width="432" height="204" /></p> <p>In the very short term, China&rsquo;s aluminium production is expected to fall in August, since production cuts will outpace commissioning of new capacity this month. Shandong Weiqiao, Shandong Xinfa, Xinjiang East Hope, Inner Mongolia Jinlian, Xinjiang Jiarun and other smelters cut output in July, while Baotou Huayun and Sichuan Bomei added new capacity or restarted closed capacity.&nbsp;</p> <p>{googleAdsense}</p> <p>SMM survey shows that production cuts continued in August, though the pace has slowed down due to high aluminium prices. The first phase of Guangxi Hualei&rsquo;s 400,000-tpy aluminum project and Guizhou Huaren&rsquo;s 500,000-tpy aluminum project will be commissioned soon. Baotou Hualei&rsquo;s aluminum project with total capacity at 780,000 tonnes will also reach full capacity soon, which will help fill in supply gap from output cuts.&nbsp;SMM expects China&rsquo;s aluminium production to be 3.08 million tonnes in August, up 12.6% YoY but down MoM, and annualized aluminium operational capacity to drop to 36.20 million tonnes. &nbsp;</p> <p>&nbsp;</p>