Chinese spot alumina prices held steady Monday despite smelter cuts over the past week, industry sources said.

However, with further cutbacks expected in the near term prices may be pressured lower, sources said.

There has been increasing talk of planned smelter in the past month on the back of prevailing weak domestic metal prices, with an estimated 600,000-700,000 mt/year of capacity expected to be reduced in the near term.

But to date, only one smelter, Beijing Xinheng Group, has confirmed cutting capacity.

It has completely shut down one of its two aluminum smelters in Qinghai province for technical upgrade, a company source told Platts Monday.

The plant, with a 500,000 mt/year primary metal capacity, was running at 350,000 mt/year in 2014.

Xinheng slashed the run rate by 200,000 mt/year in early 2015 due to weak market conditions, and shut the remaining 150,000 mt/year on Tuesday.

There are mixed views among market participants about other capacity reductions, with some saying 650,000-700,000 mt/year has already been cut this month, while others say only about half of that capacity has been cut.

"But with Xinheng actually cutting now, they may have started the trend, as everyone was waiting for someone to take the lead, so now we have to wait and see if others follow," a Henan smelter source said.

However, talks of smelter cuts have not provided much support to domestic metal prices, as the quantity is marginal against China's total capacity of about 40 million mt/year.

But the cutbacks are likely to put domestic alumina prices under pressure as demand falls, and also amid the low metal prices, multiple market participants said.

On Monday, Platts ex-works Henan alumina spot price stood at Yuan 2,360/mt ($386) for 70:30 cash and credit payment terms, unchanged from Friday and week on week.

Spot alumina prices were also pegged at a stable Yuan 2,310-2,330/mt cash in Shanxi province Monday, and at Yuan 2,250-2,280/mt cash ex-works Guangxi.

The front-month August aluminum contract on the Shanghai Futures Exchange closed at Yuan 12,210/mt, down from Yuan 12,395/mt last week, and also from Yuan 12,740/mt a month ago.