Aostar cuts output due to low aluminium prices

Sichuan Aostar Aluminium will start closing a third of the capacity at a 125,000-tonne-a-year smelter this week due to low prices and weak demand in China, the world's top aluminium producing and consuming country.

"We are starting to close down more than 50 pots in two days," a trade manager at Aostar told Reuters, referring to part of the aluminium production line that accounts for about 50,000 tonnes of primary metal production a year.

"Domestic prices are too low and our costs are high. We are making a loss of more than 2,000 yuan per tonne on production."

Reduced hydro-electricity in the winter also forced the firm to close part of its capacity, he said.

He said the shutdown could expand to half of the smelter if the market situation did not improve in coming weeks.

Aostar operates two 125,000-tonne-a-year smelters in Sichuan. The other smelter would maintain normal production, he said.

The manager said the firm expected to restart the closed capacity no earlier than April 2009.

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