China continues to cut output

Golden Horse Group announced December 24 that Meishan Qimingxing Aluminium, its sub-company, would wholly halt production. According to insiders, the trend of cutting output is enlarging in China, while rebound of the market needs support of demand affected by the key factory of macro-policy.

According to Golden Horse Group, electrolytic aluminium price of Meishan Qimingxing Aluminium Limited was falling constantly due to the weakening of demand; it decided to halt production to reduce lost.

According to introduction, re-start of capacity will be decided according to the market situation. Meishan Qimingxing Aluminium Limited has capacity of about 125000 tons. Falling of aluminium prices, which is unlikely to rebound in a short period, has been expanding capacity cut in electrolytic aluminium industry since October. Market people revealed that some aluminium factories of Shandong Alumininium have stopped production.

Strength of capacity cut of aluminium companies is not as intense compared with other industries in China. Since October, Aluminium Corporation of China, the leading company in China, has cut output by 38%. As for storage, China¡¯s State Reserve Bureau (SRB) has approved to purchase alumina of 300000 tons from January 2009 in the price of 1.300 yuan/ton for 1000000 tons in total. Local governments are also planning to purchase metals.

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