China aluminium smelter restarts slower than anticipated

China curtailed nearly 4.6Mt of production (excluding restarts) since January 2015. Wood Mackenzie estimates that China could potentially restart an additional 450kt production in 2016, on top of the 1.3Mt restarts that have already been announced, bringing the total to 1.8Mt or approximately 40% of total curtailments. We think that restarts in high-cost provinces such as Sichuan, Hubei and Henan are less likely and Chinese producers will focus on low-cost capacity additions, albeit at a slower pace. Wood Mackenzie believes the price trajectory will remain subdued against the backdrop of new capacity additions and forecast the average annual LME aluminium price at US$1,588/t in 2016, US$1,672/t in 2017 and US$1,756/t in 2018.