MIIT to release list of aluminum smelters meeting environmental protection requirement

A source said the Ministry of Industry and Information Technology will release the list of aluminum smelters meeting environmental protection requirement within this year. He added that aluminum smelters in the list will obtain support from the government in terms of power tariff and loans. Another source from a large smelter said those not in the list will secure fewer loans from local governments and lose their competitiveness. Should aluminum prices remain low, these smelters will be forced to cut or halt production. The source added that the list will involve some medium and large producers who meet standards on environmental protection and energy-saving.

Aluminum smelters are resorting to production cuts against existing overcapacity. Several large Chinese aluminum producers went to Beijing last week to negotiate over production cuts. However, no consensus has been reached regarding the details.

Market players note that if no substantial progress is made in the negotiation, high-cost producers will have but to cut or suspend production in the future.

Last year’s price declines in aluminum extended into this year. Spot aluminum fell from RMB 15,000/mt early this year all the way to RMB 14,369/mt. Aluminum prices rose later, but any upside space was seen limited.

Spot aluminum was offered at RMB 14,420/mt on April 16, below cost levels for some producers. Rising production costs against falling aluminum prices are eating into margins at aluminum smelters.