Reports are coming through that several Chinese smelters have given up the fight. So far, the cuts are small, but we suspect it’s going to be a little like a damn burst - the first few fissures will be followed by larger cracks.
Henan Zhenghou Faxiang Aluminium has reduced to 38kt, cutting their capacity in half.
Chalco Fushun with annual capacity of 300kt has closed 200kt.
Qianghai Yellow River Hydropower Recycled Aluminium with annual capacity of 500kt totally closed at the beginning of last week due to heavy losses. They had been operating at 200ktpa.
Gansu Dongxing Aluminium with total capacity of 170kt will cut 100kt in August.
As well, Xinjiang Jiarun has postponed the launch of the third stage of their 450ktpa project because of equipment troubles.
This makes a total of 540,000t of cuts, which is not enough to significantly change the direction of metal prices, but it will deliver a signal to the market, boosting sentiment.
We will bring more news on capacity cuts as soon as we can.
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