China’s metals producers, in the face of slackening demand, cut production in a bid to boost prices.
October saw Aluminum Corp of China (Chalco) announce a cut in output at is Shandong plant by 1 million tons, which could shave 5% off total national output. The firm also expects third-quarter profit to fall by over 50% year-on-year.
Demand for aluminum has decreased over the past several months as industries have seen their growth slow in step with the global economy.
China’s auto industry is already feeling the pinch and the property market is softening. The latter is a particular blow for steelmakers as building construction is believed to account for 38% of domestic steel demand. Though domestic steel consumption rose by 16% in the first half of the year, output has been falling since June.
Shougang Steel, Shandong Iron and Steel, Hebei Iron and Steel and Angang Steel, agreed to production cuts of up to 20 million tons in October.
As a result, steel mills have been cutting their demand for iron ore imports. Australian miner Mount Gibson said that several of its Chinese customers asked that shipments be delayed to 2009. However, major players BHP Billiton and Rio Tinto denied any disruption.