London 14/06/2016 - Aluminium market participants are extremely sceptical about reports claiming major Chinese smelters would cut production if domestic prices drop below 11,500 yuan per tonne.
Chinalco, State Power Investment, China Hongqiao, Jiuquan Steel Group, Yunnan Aluminum and Jinjiang Group discussed a potential cut at a meeting in Beijing "to maintain market stability and to guarantee long-term stable and healthy development of the aluminium industry consensus", according to a statement published by Antaike on Monday.
But there has been no commitment to cut production, even at lower price levels, sources said - the move was dismissed as an attempt to talk up the market.
"It's a shot across the bows of the shorts. The future curve is pointing south and this is what they are trying to correct but with words only," AZ China's Paul Adkins said.
"These guys are taking lessons from Donald Trump. Say what they like to get the desired response from the market place," he added.
He also questioned why few of China's leading aluminium smelters attended the meeting - major absences include Xinfa, Tianshan and Nanshan Aluminium.
"There was no agreement and, even if there were, just look at the six companies named," he added. "With cash costs well below 10,000 yuan per tonne, why would Hongqiao agree to cut capacity?"
China Hongqiao declined to comment when contacted by FastMarkets.
Many Chinese aluminium companies' production costs are much lower than 11,500 yuan, sources said. On the Shanghai Futures Exchange, aluminium closed at 11,855 yuan per tonne on Tuesday.
"They can still make very decent profits even if the price goes below 11,500 yuan," an aluminium trader in China said.
(Reporting by Archie Hunter, Ian Walker and Meimei Qin, editing by Mark Shaw)