Shanghai Sigma Expands Production Cut

Chinese largest secondary alloyed aluminium maker, Shanghai Sigma Metals expands the production cut to 40% from a year earlier level while the firm started to reduce the output by 20% in December from a year earlier. The firm stopped 3 of 7 lines in early December to meet slower demand, according to Japanese trading firm source. The alloy maker eyes additional production cut depending on the order.

The firm announced in late November the 20% production cut from December to January compared with a year earlier level. However, the firm expands the production cut when the order receipt decreases for January-March due to major output reduction by automakers. The maker’s production is estimated to be 13,000-14,000 tonnes in December while the production was 21,000 tonnes in November, which is near the capacity of 22,000-23,000 tonnes.

Lower market price apparently impacts on the production plan. The firm liquidated the inventory by selling to London Metal Exchange licensed warehouse in Singapore. However, LME alloyed aluminium price dropped to less than US$ 1,200 per tonne from the peak of more than US$ 2,700 in July. The loss making price level encourages the maker to reduce the production.