China's top aluminium firms gather to address price slump

BEIJING: Representatives from China's biggest aluminium producers will hold a meeting in the southern region of Guangxi to discuss slumping demand and falling prices, three sources familiar with the matter said on Wednesday.

The producers held a similar gathering in late 2015 and the meeting comes as a protracted price decline leaves smelters struggling to turn a profit, even after significant output cuts. China is the world's biggest producer and consumer of aluminium.

The China Nonferrous Metals Industry Association (CNIA) called the meeting, which will be held on Friday in Nanning, the capital of the Guangxi region, to discuss the current state of the market, the sources said.

One source said China Hongqiao Group, the world's biggest aluminium maker, will be represented by the general manager of its sales unit.

A second source, an executive at Aluminum Corp of China Ltd ,, or Chalco, also said he was going to Guangxi.

Wen Xianjun, the CNIA vice president in charge of aluminium, did not answer calls seeking comment, while Hongqiao did not respond to an emailed request for comment.

Aluminium futures on the Shanghai Futures Exchange (ShFE)  are down 13.5 percent in 2018, on course for their worst year since 2015 amid ample supply and falling Chinese demand. Prices were at 13,690 yuan ($1,985) a tonne on Wednesday and earlier this month dropped to their lowest since September 2016.

"This gathering together is more like the one that happened at the end of 2015, when the ShFE prices went down to below 10,000 yuan," said Jackie Wang an analyst at commodities consultancy CRU in Beijing.

"And I think probably the producers - the major ones - will talk about what they can do to support the market, if there's a possibility to do further curtailments," she added.

CRU estimates that 2 million tonnes of annual aluminium capacity in China has been shut because of the price fall.

At the December 2015 meeting, Chinese aluminium smelters agreed to cut 500,000 tonnes of capacity by the end of the year to whittle down the glut, the CNIA said then. Some 4.41 million tonnes had already been cut by that point.

ShFE aluminium stocks <AL-STX-SGH> almost topped 1 million tonnes for the first time this spring. They have since declined to below 700,000 tonnes but that is still almost seven times what they were at the start of 2017.