China's top five alumina producers, including Aluminum Corp of China Ltd (Chalco) , will cut production by 10 percent from June because of changes in the supply of bauxite imports, state-backed research firm Antaike said on Thursday.
Chalco will cut alumina capacity by 1.7 million tonnes because the change in Indonesia's bauxite policy had affected the supply of imported bauxite for the company, Chalco said in a statement filed to the stock exchange in Hong Kong.
Chalco has an alumina capacity of 14 million tonnes a year, making it the country's top producer of the material used for the production of primary aluminium.
Bauxite is the ore from which alumina is produced.
Indonesia, China's top bauxite supplier, imposed a 20 percent tax to exports of some metals ores, including bauxite, in May and cut shipments, affecting supply to China. Indonesia also plans to ban the export of ores in 2014.
A rise in import prices is pushing up domestic prices of alumina in China, prompting aluminium smelters to import the material alumina.
China's alumina imports surged 74 percent from a year earlier to 1.44 million tonnes in the first four months.
Smelter sources see monthly imports staying high in the second quarter, which could squeeze local alumina producers' profits.
"In the principle of maximising benefits, the company has determined to implement flexible production arrangements," Chalco said.
In the statement by Antaike, Chalco and four other top alumina producers were proposing that all alumina producers in China cut production by 10 percent from June in order to stabilise the market.
The four are Shandong Nanshan Group, Nanchuan Minerals (Group) Co Ltd, Xinfa Group and Gaoxin Aluminum & Power Co Ltd, which has been the sole alumina supplier since January 2010 to aluminium producer China Hongqiao Group Ltd.
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