In the meeting, attended by Chalco, Yunnan Aluminium and Shandong Nanshan Aluminium and others, suggestions on how to tackle the problem were discussed ‘behind closed doors’.

It was decided to control the total capacity of the industry, enforce rules of industry access and implement a policy of differential electricity prices. A replacement and exit mechanism for aluminium capacity was also needed along with a compensation fund for those companies involved.

It was also suggested that China develops policies favourable to the expansion of aluminium usage in various industries, such as power, transportation and home furnishings.

According to the CNIA 89 (46%) out of 281 large aluminium producers were incurring losses and that aluminium selling price was lower than the cost of production.

Planned capacity under construction in China is roughly 4.2Mt/yr, 48% of which was in the North West of the country, predominantly in Xinjiang.

The smelters in the meeting agreed to suspend 1Mt/yr of capacity. Chalco plans to suspend 380kt/yr of capacity, Yunan Aluminium said it would cutback by 150kt/yr and Xinheng Group is to cut 120kt/yr. The Qujing Aluminium Smelter, affiliated with Yunnan Dongyuan Coal & Power, stopped 150kt/yr during Q1 of 2013.

From January to April 2013, China produced 7Mt of primary aluminium, up by 10.24% on the same period last year.

Source: China Metals.