Chalco shuts 470,000 tonnes of aluminium production on Chinese aluminium price plunge

Headquartered in Beijing, Aluminium Corp of China Ltd., also known as Chalco, is reportedly reducing output on some of its aluminium production lines in northern China because of Chinese aluminium price plunge to a two-year low, announced the company itself on Friday, November 30.

Shanghai aluminium prices today, on November 30, ended down 0.8 per cent at RMB 13,555 per tonne, the lowest close since September 30, 2016.

Chalco said to the Shanghai Stock Exchange that it would shut around 470,000 tonnes of annual aluminium production at units in Shanxi Huasheng and Shandong Huayu, subject to flexible output arrangements.

According to the company’s annual report, this 470,000 tonnes figure accounts for nearly 12 per cent of Chalco’s 3.93 million tonnes of primary aluminium capacity at the end of 2017. This puts Shanxi Huasheng’s annual capacity at 240,000 tonnes and Shandong Huayu’s at 200,000 tonnes.

China’s biggest state-run aluminium producer said it took this step after considering the market conditions and production restrictions required for environmental protection, but gave no timeframe for the duration of the cuts, as of now.

During the 2017-18 winter heating season, the company did not have to cut metal output on environmental grounds as smelters located outside the 28 northern Chinese cities required to place special restrictions on the industry during the heating season.

However, this winter’s restrictions on smelting are so far more lenient than the stipulated 30 per cent curbs last winter, as cities can determine the extent of the cuts themselves.