Twenty of China’s largest aluminum smelters have plans to take 350,000 metric tons of production off-line, according to this recent Bloomberg article. They are doing it in the hopes of boosting prices and to reduce energy consumption. Power shortages have been a critical concern within China and a falling aluminum price only helps the argument to shut down some production capacity.
Aluminum hit a high of $3380.15/ton back in July on the LME. Tuesday’s aluminum price close in China was $2407.21 nearly a 30% drop. Though the price of aluminum in China and the price of aluminum on the LME are not quite the same, they are correlated. By reducing production from some of the world’s largest producers, the industry hopes to shore up pricing, despite the current condition of oversupply and slowing demand. You can read our price predictions for aluminum from August 20 here.