BEIJING (Reuters) - Representatives from China’s biggest aluminum producers will hold a meeting on Friday in the southern region of Guangxi to discuss slumping demand and falling prices, said three sources familiar with the matter.
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 aluminum.
The China Nonferrous Metals Industry Association (CNIA) called the meeting, which will be held in Nanning, the capital of the Guangxi region, to discuss the current state of the market, the sources said on Wednesday.
One source said China Hongqiao Group, the world’s biggest aluminum maker, will be represented at the meeting by the general manager of its sales unit.
A second source, an executive at Aluminum Corp of China Ltd, or Chalco, said he was also going to Guangxi to attend the gathering.
Wen Xianjun, the CNIA vice president in charge of aluminum, did not answer calls seeking comment.
Aluminum maker Hongqiao said in a statement on Thursday that it had received the invitation and will attend but could not disclose details on the closed-door meeting.
Aluminum futures on the Shanghai Futures Exchange (ShFE) have lost 14 percent so far in 2018, on course for their worst year since 2015 amid ample supply and falling Chinese demand. Prices were at 13,610 yuan ($1,970.20) a ton on Thursday, and earlier this month dropped to their lowest since September 2016. [MET/L]
“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 aluminum capacity in China has been shut because of the price fall.
(GRAPHIC: China's aluminum producers set to meet to discuss slumping demand, prices - tmsnrt.rs/2R4DMQ0)
At the December 2015 meeting, Chinese aluminum 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 aluminum stocks 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.
Reporting by Tom Daly; Editing by Christian Schmollinger and Tom Hogue