Hong Kong — China is to continue output cuts in the domestic aluminum sector during the coming winter heating season (November 15-March 15), in line with its targets for energy savings and emissions cut, the Ministry of Industry and Information Technology said on its website Friday.
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The aluminum and alumina sectors will both be required to cut 30% or more, while the nonferrous metal melting and carbon sectors must cut output by 50%, according to MIIT.
MIIT said a differentiated output cut policy would apply in the winter season instead of a "one-size-fits-all" policy. It said eco-friendly producers that had already managed to go beyond their required output cuts would be asked to cut output less or would be exempted from output cuts.
Producers with capacities on China's industry restructuring list would be required to halt operations or intensify their output cuts, while those that need to maintain operations in the winter would be required to undergo strict assessments by local governments, MIIT said.
Various Chinese cities have been asked to complete drafts of their winter output reduction plans by the end of September, MIIT said.
The Shanghai Futures Exchange's most active 1809 aluminum futures contract prices closed at Yuan 14,390/mt ($2087) Friday, up from Yuan 14,320/mt Thursday, SHFE data showed, following the news.
Despite the price rebound, Chinese analysts are cautious about price movements.
Shenzhen-based Chinese brokerage Jinrui Futures said in an aluminum report Friday that despite the aluminum sector output cuts, an estimated 2.7 million mt/year of new Chinese aluminum smelting capacity is estimated to have been commissioned in in the first half of the year. It said an excessive price rebound and the resultant higher profits could spur higher output.
Chinese refined aluminum output in the first half was 16.47 million mt, up 1.6% year on year, data from National Statistics Bureau showed.
China Construction Bank said in its aluminum report this week that since July last year aluminum output has been affected by supply side reforms, but so far in 2018 overall run rates have gradually risen.
China's aluminum output in 2018 is forecast at 38 million mt, up from estimated output of 36.66 million mt in 2017, with domestic aluminum demand this year seen at 37.6 million mt, up 6% year on year, data from state-run metals consultancy Beijing Antaike showed.
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