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Chinese firms agree to 800,000-tonne cut to annual aluminum capacity

A total of 20 Chinese aluminum producers plan to slash annual smelting capacity by 800,000 tonnes in coming months amid low prices, Reuters reported Dec. 21, citing an official of the China Nonferrous Metals Industry Association.

Paul Adkins, managing director of aluminum consultancy AZ China, said the companies making the cuts hoped to generate replacement permits, allowing smelters to replace old facilities with more modern plants, implying the move would be a "net zero reduction," the newswire added.

The industry association meeting had representatives from major industry players, including China Hongqiao Group Ltd., Aluminum Corp. of China Ltd., Xinfa Group Co. Ltd., Hangzhou Jinjiang Group and East Hope.

The meeting was called in the prior week by the association to discuss declining demand and depressed market prices that are close to two-year lows.

Antaike, a research arm of the association, said about 3.2 million tonnes of capacity has been cut by smelters in 2018, adding that the operating pressure on smelters was "reaching the extreme limit," according to the companies at the meeting.

In mid-December, China's Henan Zhongfu Industrial Co. Ltd suspended 30% of its electrolytic aluminum capacity, closing a 250,000-tonne-per-year smelter in the city of Linzhou in Henan.