The aluminum giant has failed to reach an agreement to reduce production and stop losses.
July 16 21:01:55, 2025
**Abstract**
Domestic aluminum companies are facing significant challenges, with large-scale losses prompting many to seek joint production cuts. According to a reporter, on April 10th, major industry players quietly gathered in Beijing to discuss coordinated production reductions. One of the key topics was how to collectively cut output to stabilize prices and improve profitability. However, due to the high costs associated with shutting down operations and pressure from local governments, no formal agreement was reached at the meeting.
“The next step is not about whether production cuts are good or bad,†said an industry insider on April 11. “The recent rebound in aluminum prices has made many companies hesitant. But without actual production cuts, supply won’t decrease, and the resistance above aluminum prices remains strong.â€
The sluggish state of the domestic aluminum sector has also led to a sharp drop in alumina imports. After 15 months of steady imports, China’s alumina imports fell to 200,000 tons in March, a significant decline from previous months. According to China Customs data, total alumina imports from January to March amounted to 1.04 million tons, a 10.3% year-on-year decrease. March alone saw a 54.5% drop compared to the same period last year.
**Production Reduction Game**
According to the China Nonferrous Metals Industry Association, the electrolytic aluminum industry operated at 93% capacity in 2012. Recent reports show that major aluminum producers such as Chinalco, Zhongfu Industry, Chang Aluminum, and Dongyang Aluminum all experienced losses or sharp profit declines in the past year.
On April 10th, representatives from major aluminum companies met in Beijing to address the ongoing crisis, with production cuts being one of the central topics. The meeting included listed companies like Jiaozuo Wanfang, Chinalco, Zhongfu Industry, Shenhuo, Nanshan Aluminum, and Yun Aluminum, along with other key players such as Xinfa Aluminum and China Power Investment Corporation.
Despite the gathering, the discussions did not lead to any concrete agreements. “Although nothing was decided, it's still a positive step that everyone came together and had a conversation,†said one participant. “It’s not a meeting that can be easily concluded.â€
Many aluminum companies are reluctant to reduce production due to the high costs of shutting down electrolytic plants, as well as pressure from local governments. A source close to the talks noted that even profitable companies have seen their profits shrink after accounting for local support measures. “If a company wants to cut production, it might not be what local governments want to see.â€
Industry analysts point out that in some regions, electrolytic aluminum is a key pillar of the local economy. Reducing production could affect GDP, tax revenue, and employment stability—issues that the government must consider. “Companies think about profit and loss, but they also take social responsibilities into account,†one analyst said.
To ease the burden on aluminum companies, several provinces have introduced tariff subsidies. For example, Henan has provided direct financial assistance to subsidiaries. Recently, Jiaozuo Wanfang reported first-quarter profits ranging from 65 million to 95 million yuan, with 38.52 million yuan coming directly from government subsidies.
“Some companies were losing money before, but after receiving government aid, they turned a profit,†said a non-ferrous metals authority. “This has led to continued overcapacity, yet production expansion continues.†However, industry insiders argue that these subsidies are meant to help enterprises during tough times. “It’s different from previous electricity price subsidies. This is the government supporting key enterprises. If the market misinterprets this and tries to suppress aluminum prices, the situation for aluminum companies will only get worse.â€
**Alumina Imports Fell Sharply**
According to Shanghai Nonferrous Metals statistics, alumina imports in the first two months of this year remained stable. The sharp decline occurred in March, marking the first time since December 2011 that monthly imports dropped below 200,000 tons.
Gan Chao, an analyst at Baichuan Information, said the drop in alumina imports was mainly due to the high price of imported alumina compared to domestic prices. “Domestic prices are more competitive, so companies are choosing to buy locally instead of importing,†he explained.
Data from Baichuan Information showed that imported alumina was priced around 2,700 yuan per ton in March, while domestic prices ranged from 2,500 to 2,600 yuan per ton, with southern markets even offering it as low as 2,900 yuan per ton.
However, price isn’t the only factor behind the import decline. Yu Chao noted that new capacity additions in Inner Mongolia and Shandong have led to an oversupply of alumina. “Even with some production cuts later, the overall supply remains high,†he said.
Fan Yanxia, an industry analyst, added that the reduction in alumina demand is also linked to lower production levels by domestic electrolytic aluminum companies. “In Shandong, for example, alumina operating rates have dropped to around 70%, with prices falling to as low as 2,550 yuan per ton.â€
According to statistics, domestic aluminum companies reduced production by 535,000 tons in March, with plans to cut another 625,000 tons in the coming months. Analyst Xu Ping suggested that if production cuts continue, alumina imports may keep declining.