As IAI figure showed, China’s April aluminium production was 1,895kt with daily production at 63,000t, decreasing 4% m/m. Based on AZ China statistics, the total capacity cuts were 1,445kt since the beginning of this year, involving 19 smelters. On the surface, the negative effect in China from overcapacity is weakening, but the market situation remain soft with passive emotion and continued financial pressure on individual smelters.

As of 23th May 2014, SHFE Spot Price was RMB13120/t, decreasing 2% compared with the previous month highest record, because the restocking before China dragon boat holiday drove the price jump. In overall, it looks like that China aluminium industry is stepping on the same place they had been.

But with the production reducing, all of us want to ask when will the price go up? In fact, if the closures continued to increase, the price may have a chance to rebound. But more smelters, especially in Guizhou province have a plan to restart in future months because of demand season (Table 1), so aluminium future price have a downward pressure in the long term and will lead the market be more caution.

As the table show, the total capacity will restart reach 1,225kt, almost offsetting all the cut production. Obviously, we still face the problem of oversupply. In addition, China economic data is still not very strong, with parts weakness. So it will be difficult for aluminium prices to have any sort of generous rebound.