Guangxi issued a series of policies and measures of late to support some key industries to grow steadily, including the restarts of local aluminum smelters.
For the aluminum producers that have cut production this year due to epidemic or energy-saving technical transformation, a certain rewards will be given according to the level of capacity utilization improvement if they ramp up capacity in the fourth quarter.
According to Mysteel's survey, total installed capacity of primary aluminum in Guangxi was 3.07 million tonnes/a by the end of October, and the operating capacity totaled 2.46 million tonnes/a. There are more than 520,000 tonnes of capacity waiting to be resumed. Mysteel expects that around 100,000 tonnes of capacity are likely to be restarted in November and December.
Mysteel survey on aluminum restarts in Guangxi (kt/a)
Data:Mysteel
In February 2022, Guangxi government issued some policies and measures to support aluminum smelters in Baise City to restart. Then Baikuang Aluminum, which curtailed production driven by the pandemic, started to resume cells in an orderly manner. Supportive policies and high margins in H1 stimulated local smelters to accelerate the resumption and new commissioning.
Mysteel survey shows that a total of 520,000 tonnes of aluminum capacity in Guangxi have been put into operation during March-May, and 130,000 tonnes during June-October.The process of restarts and new commissioning slowed down in H2 due to high production cost.
According to Mysteel Aluminum Cost Model, some smelters in Guangxi have faced losses since July. The weighted average all-in cost in Guangxi was above Yuan 19,100/t in October, which led to an average loss of more than Yuan 500/t for local producers. It is expected that they will keep running in the red in November due to high power costs in dry season.
We believe that local smelters will actively restart cells with the supportive policies from the government. However, the enterprises will take into consideration other factors, like production cost, to decide the pace.
Written by Marina Yang, yangli@mysteel.com