Chinese aluminium sector’s restart seen focused on Q4: trade body

The restart of mothballed aluminium smelting capacity in China will likely be concentrated in the fourth quarter when the current slack domestic buying season is over, the China Aluminium Association said.

Falling refined aluminium prices last year led to many smelters in China halting production or cutting output.

But with domestic aluminium prices at Yuan 12,740/mt ($1,911/mt) as of end-June, up Yuan 1,790/mt from January, and reports this week of a shortage of aluminium ingot as more companies buy molten aluminium, so the sector will start to put unused capacity back into production, the CAA said.

While ingots are more easily delivered, molten aluminium can save Yuan 800-Yuan 1,200/mt ($120-$180/mt), boosting smelters’ profits and meaning ever more new aluminium smelting capacity in China produces molten aluminium instead of ingots, tightening the supply of the latter, Chinese brokerage Huatai Futures said in a recent report.

Aluminium stocks at Shanghai Futures Exchange as of Friday were 144,058 mt, down 5,263 mt week on week, SHFE data showed.

Falling domestic aluminium inventories and higher prices should see aluminium smelters gradually restarting during the second half of the year, Huatai said.

China’s operating aluminium output capacity in June was 32.54 million mt/year in June, up from 32.41 million mt/year in May, figures from the Shanghai Metal Exchange showed.