China halts 1 million tonnes of primary aluminium capacity

Market sources in China have reported that China has temporarily halted 1 million tonnes a year of primary aluminum capacity so far this year. A further cut of 300000 tonnes capacity is expected in the country's east before year end if metal prices remain low.

However, this is unlikely to solve the global industry's overcapacity problems, specializing in the Chinese aluminum sector. China is currently producing at a rate of 24 million tonnes a year of aluminum on an installed capacity of 28 million tonnes.

Aluminium inventories on LME are already at all time highs of 5225975 tonnes till May. The prices were earlier benefitted by the financing deals that were creating a shortage in spot markets for Aluminium. After the slowdown in spot demand, even the factor of forward deals is not benefitting the metal.

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