Hongqiao Ordered To Cut 550 Thousand Metric Tons Of Capacity Through Mid-March

Hongqiao Ordered To Cut 550 Thousand Metric Tons Of Capacity Through Mid-March

The most prolific aluminium producer on Earth will be compelled to cut over half a million metric tons per annum of production capacity over the winter months as part of the state’s effort at fighting smog production.

According to documents obtained by Reuters, the Shandong province’s city of Binzhou has ordered the closure of five smelting facilities operated by China Hongqiao Group for part or all of the winter heating months. Both CRU and AZ China calculate that the closure of the specific potlines totals the loss of 550 thousand metric tons of annual capacity for the period, or roughly 8.5 percent of the firm’s 6.46 million metric tons of known capacity. Per AZ China’s Paul Adkins, the cuts described will satiate approximately a day and a half of China’s aluminium demand.

In addition to cuts to primary aluminium, the municipal government ordered two of Hongqiao’s refineries to curtail a total of 2 million metric tons of alumina, representing about 13 percent of the firm’s total yearly capacity.

Though the cuts are a sizable divot of the firm’s capacity, a portion of the curtailment will be for only December and January and not for the entirety of the mid-November to mid-March heating season. The province has mandated that cities in its territory institute at least two months of cuts during the period.

This season’s cuts, though of some impact, pale in comparison to the 30-percent across-the-board cuts mandated by Beijing last season. However, many experts question the enforcement of such mandates, noting the significant supply of virgin aluminium despite the mandate.

For its part, Hongqiao relayed in an email to the media yesterday that it will “actively respond to the Binzhou winter cuts in accordance with the list issued by the government.” However, the company did not follow up with specific details.