A sales manager at a smelter in northern China said, “The company had already sold some aluminum in the futures market last week, as prices have risen above our production costs.â€
He added that in the past two months, smelters have significantly reduced their spot aluminum sales due to low prices. China's spot aluminum prices have risen nearly 5% from June to 15,290 yuan ($2,258) per ton on Wednesday. A futures analyst said that the current average aluminum production cost in China is about 15,000 yuan per ton, but if the sales volume increases, it is estimated that the profit margin of the producer will be narrowed.
He said that it is estimated that the aluminum inventory of the mill is about 2 million tons, he pointed out that not all of the stocks of the exchange warehouse, processing plants and smelters can enter the market. He said that in the past few weeks, some smelters have shipped aluminum that exceeds local demand to cities such as Shanghai and Guangdong.
“But aluminum stocks are still growing compared to late June, and 2 million tons of aluminum stocks are not surprising.â€
China's domestic aluminum prices are low or the producers are increasing the export of duty-free aluminum semi-finished products. According to the data, in the first half of this year, China's aluminum semi-finished products exports increased by 91%.
Aluminum stocks in China's Shanghai, Wuxi City, Zhejiang Province and Nanhai City, Hainan Province are estimated at 900,000 tons, compared with about 1 million tons in late June.
This includes 492,264 tons of aluminum stocks as of the Shanghai Futures Exchange as of July 30.
A senior official at a large smelter in Henan said that the aluminum smelter in the province has cut production by about 500,000 tons per year since June due to low aluminum prices. He said that after the production is partially shut down, the province will still have about 5 million tons / year of production capacity.
Although some producers cut production, the domestic aluminum supply has not decreased due to the new smelter's production since June. This includes a smelter with an annual capacity of 300,000 tons/year in Ningxia.
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