The restart of mothballed aluminum smelting capacity in China will likely be concentrated in the fourth quarter when the current slack domestic buying season is over, the China Aluminum Association said Friday.
Falling refined aluminum prices last year led to many smelters in China halting production or cutting output.
But with domestic aluminum prices at Yuan 12,740/mt ($1,911/mt) as of end-June, up Yuan 1,790/mt from January, and reports this week of a shortage of aluminum ingot as more companies buy molten aluminum, so the sector will start to put unused capacity back into production, the CAA said.
While ingots are more easily delivered, molten aluminum can save Yuan 800-Yuan 1,200/mt ($120-$180/mt), boosting smelters' profits and meaning ever more new aluminum smelting capacity in China produces molten aluminum instead of ingots, tightening the supply of the latter, Chinese brokerage Huatai Futures said in a recent report.
Aluminum stocks at Shanghai Futures Exchange as of Friday were 144,058 mt, down 5,263 mt week on week, SHFE data showed.
Falling domestic aluminum inventories and higher prices should see aluminum smelters gradually restarting during the second half of the year, Huatai said.
China's operating aluminum output capacity in June was 32.54 million mt/year in June, up from 32.41 million mt/year in May, figures from the Shanghai Metal Exchange showed.
