SMM expects little impact on near-term China aluminum supply from production resumptions

Some aluminum producers in Guizhou, Gansu, Henan and Guangxi are now restarting production after local governments introduced stimulus measures, but China’s aluminum market is not expected to suffer immediate impact from those resumptions in the short term, Shanghai Metals Market foresees.

At present, some 700,000-tpy, one third of China’s idled aluminum capacity, is scheduled to resume production soon, SMM leant.

Nevertheless, this restarting of idled capacity is proceeding more slowly than as markets had expected.

Cash-starved smelters and similarly strapped local governments are finding it difficult to collect sufficient funding to support massive capacity restarts. Moreover, the preferential power rates promised by local governments remain subject to negotiations with power grid operators. In fact, many smelters will continue to struggle in loss-making territory even with the promised preferential power rates, meaning that they have little incentive to move ahead aggressively.

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