Further fall of aluminum price in China may trigger production cut

It is reported that spot aluminum price in China is possibly to fall below the cost line of CNY 15,000 per tonne after the National Day holiday which may force domestic aluminum producers to cut production.

Aluminum futures price on the Shanghai Futures Exchange arrived at a peak of CNY 20,900 per tonne at the beginning of this year but has declined to CNY 15,500 per tonne this week, due mainly to oversupply.

China's crude aluminum output is estimated to reach 14.45 million to 14.9 million tonnes in 2008, compared with 14.32 million tonnes in 2007. Though the output increase is moderate, analysts estimate the nationwide inventory at over 500,000 tonnes.

Despite the price decline, downstream enterprises still have no will to make purchases as some aluminum makers, especially big ones, are still expanding their production capacities despite general oversupply.

Recently, Aluminum Corporation of China Limited said it had no plan to reduce production on large scale on the ground of market uncertainties.

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