Do not Expand Production Reduction Effect in Aluminum Enterprises

(China Aluminum Network) Aluminum price was improved slightly in recent days. It is learned that since 2013 many aluminum manufacturers in Henan, Jiangsu, Yunnan and Guangxi has reduced production of 451 thousand tons. Moreover, two aluminum enterprises in Hubei also plan to reduce production of 110 thousand tons. Guangxi Yinhai Aluminum said aluminum price was far away from the cost line if the government do not offer concerned subsidy, production reduction in aluminum factory may continue and heavier.

In fact, reduction in aluminum enterprises was common situation in recent years. In April last year, owing to the growth of power tariff, cost increased as well in aluminum enterprises. The electrolytic aluminum capacity was reduced near 400 thousand tons; the spot price was about 16,000 Yuan/ton at that time, lose in enterprises was about 500 Yuan/ton. After reduction trend, aluminum price was dropped all the way.

The lowest price of A00 aluminum ingot was 14,350 Yuan/ton now; this means the loss has enlarged to more than 1000 Yuan for each ton of electrolytic aluminum.

But reduction brings limited improvement in aluminum price; the market should pay reasonable attitude to reduction and should not expand the effect. Aluminum price rebounded may just a flash in the pan.

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