China’s Aluminum Producers Forced to Shut Down as Prices Plummet
Caixinglobal - China’s aluminum industry has seen prices plunge due to weak demand amid the Covid-19 pandemic, pushing smelters to suspend production.
More than 20 smelters in the country with a combined 709,000 tons of capacity have halted production in the name of maintenance or equipment renovation as of Tuesday, data from aluminum information provider AZ China Ltd. suggests. The world’s second-largest aluminum producer, China Zhongwang Holdings Ltd., has gradually suspended 230,000 tons of output capacity since Tuesday.
The mass shutdown was driven by a slump in market prices. The most-traded aluminum contract on the Shanghai Futures Exchange fell as much as 15% to 11,950 yuan ($1,689) on Wednesday from 14,090 yuan at the beginning of the year. According to AZ China, the full cost of electrolytic aluminum in China was 12,455 yuan per ton last week, indicating that 84% products or around 30.48 million tons were likely sold at a loss.