Profit margins rise at Chinese aluminium smelters; more capacity to come online

The recent slump in alumina prices in China has seen aluminium producers from the country making reasonably high profits. Of late, the profit margins have been improving steadily, Shanghai Metals Market found in a survey.

The average profit registered by the Chinese aluminium smelters stands at around 1,400 yuan per tonne. This reflects a healthy market scenario given the fact that the aluminium prices, both in the London Metal Exchange market Shanghai market, and are trending at lows.

In the week ending April 30, SMM average spot aluminium price stood at 14,106 yuan per tonne, down 74 yuan per tonne from the previous week. The price of the light metal is expected to drop further across the globe, at least, in the near term.

In another survey, SMM found that several aluminium producers in Southwest China are planning to bring their restarted or new aluminium capacity online in the coming quarters.

Chalco (Zunyi) has already restarted its 160,000-tpy aluminium capacity on May 1. Chongqing Tiantai Aluminum is all set to bring its 60,000-tpy aluminium capacity online on May 20. Guangxi Hualei New Materials will start operations at its 500,000-tpy new aluminium capacity on August 28, and Guangxi Investment Group will put a 250,000-tpy new aluminium capacity on stream in May and restart another 150,000-tpy aluminium capacity in July this year.

So despite capacity clampdown in the second half of 2016, aluminium supply in China major markets and world market will not be affected in the long term, SMM observes.

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