Chinese Aluminum output to remain surplus amid production cuts

BEIJING (Scrap Monster) : The Chinese Aluminum supply is to remain at surplus levels until 2018, says the market research group CRU.

As per studies conducted by CRU, China’s aluminum production is to remain surplus for the next five years, despite more production cuts at its smelters. The study signifies that the surplus levels would be ‘manageable’ provided the country implements production cuts in the range of 4 million to 5 million metric tons by 2018. China had reduced the aluminum output during the year by nearly 1 million metric tons and is expected to reduce it further by a million metric tonnes by 2015.

The CRU study report also mentions that the global aluminum production is estimated to touch 50.8 million metric tonnes during the year, increasing by 5.5% year-on-year. The supply-demand gap during the year would be nearly 1.2 million metric tonnes.

The fall in metal prices and the rise in production costs have dented the profits of aluminum smelters across the world. Around one-third of the aluminum smelters in China-the world’s largest producer and consumer of the metal, are reported to be running at losses. The high premiums, huge labor and energy costs have severely damaged the aluminum industry in Europe and elsewhere in the world.

The CRU recommends implementing increased production cuts to more balance the supply-demand ratio.