China Hongqiao Aluminium Capacity Move To Yunnan Postponed Due To Power Cuts

China Hongqiao Aluminium Capacity Move To Yunnan Postponed Due To Power Cuts

The world’s biggest non-state-owned aluminium producer China Hongqiao Group said last week the planned relocation of aluminium capacity to Yunnan has been postponed due to energy limits put in place by the provincial government.

Hongqiao chairman Zhang Bo said at Antaike’s China International Aluminium Week on Wednesday that the move of 3 million metric tons per annum of production capacity was originally contemplated due to expected savings on energy prices and lower carbon emissions.

So far 1 million metric tons per annum of aluminium smelting capacity was relocated to Wenshan so far. However the remaining 2 million metric tons per annum, which was destined for Honghe, has been postponed to a later date.

Zhang confirmed that the company was discussing the move with authorities and planned to “adjust” its move date.

CRU analyst Ross Strachan explained in a webinar the day before that power cuts has curtailed a non-trivial amount of aluminium capacity in China.

“Over 2.9 million tonnes per year of (Chinese aluminium) capacity have been curtailed due to power shortages and dual control measures.”

“(Yunnan) may have to be even more cautious as it goes forward, with possibly an extra 1 million tonnes of curtailments likely to take place there in the fourth quarter and no ramp-ups likely until the second half of 2022,” he continued.

As for the future, Zhang counseled the aluminium industry to prepare for difficult conditions to continue for the months and years ahead.

“I want to call for companies in the industry to maintain product prices, secure supply, stabilise prices and market expectation.”

Zhang went on to counsel the state to not rush into carbon emission limits.