High-cost Chinese aluminum smelters under growing pressure to cut output

High-cost aluminum smelters in China are under growing pressure to cut output against falling aluminum prices, Shanghai Metals Market notes.

Some 7.85 million-tpy aluminum capacity in China - 22.3% of the country’s operational aluminum capacity - were operating above the cash costs of 13,000 yuan per tonne as of the end of June, SMM statistics showed.

These capacities concentrate in Guizhou, Guangxi, Qinghai, Ningxia, Hubei, Yunnan, etc. Of them, 60% of smelters are small ones with annual capacity at less than 200,000 tonne.

A majority of these small smelters suffer from high power costs due to a lack of captive power plants, thus bearing the brunt of falling aluminum prices.

SMM spot aluminum prices hit over six-year low of 12,050 yuan per tonne on July 8.

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