Reuters
China to publish list of aluminium smelters that meet green standards
Edited by : AL CIRCLE
3 min read
China plans to publish a list of aluminium smelters that meet its environmental standards, with firms selected receiving help in cutting costs, while those left off could be forced to curb output as they become less competitive.
Lower production in the world's top producer and consumer of aluminium would help support international prices, which have fallen more than 8 percent so far this year.
The Ministry of Industry and Information Technology is preparing the move in the wake of a similar list for steel mills published last week, with the country's new leaders under pressure to tackle a festering pollution crisis that has become a source of increasing public fury.
"The ministry has not done (the list for aluminium smelters yet). It should be within this year," said an industry source who attended the meeting in Beijing but declined to be named due to the sensitivity of the issue.
He added that smelters that make it onto the list would receive government support through steps such as lower power fees and loans.
"Smelters that fall outside the aluminium list would be treated differently, such as getting less credit from local banks," said a source at a large smelter.
Companies not on the list would become less competitive and may be forced to cut production or close if domestic aluminium prices stay low, he added.
Like steel mills, the aluminium list is expected to include smelters that are medium or large-sized and meet environmental and energy-saving standards, the sources said.
Aluminium prices in China have hovered near 3-year lows as an economic slowdown saps appetite. The front-month contract on the Shanghai Futures Exchange, which reflects spot prices in the country, was trading at 14,650 yuan on Friday, down more than 3 percent so far this year.
Prices have remained low even though the state stockpiler bought a total of 400,000 tonnes of metal from smelters in two tenders in November 2012 and March 2013.
Some large smelters at the meeting earlier this week discussed possible coordinated cuts in production in a bid to limit supply and boost prices, but different production costs and requirements from local governments meant that these would not be possible to implement, the sources said.
About 700,000 tonnes a year of aluminium capacity has been idled so far in 2013, said Yao Xizhi, a senior analyst at state-research firm Antaike, adding that smelters may already have cut 500,000 tonnes a year of capacity by the end of last year.
An executive at a smelter in Guizhou, in southwestern China, estimated that combined idled capacity has reached 1-1.2 million tonnes currently given that some plants that produce primary aluminium for their own use in the manufacturing of semi-finished products have cut production.
More than 20 million tonnes of aluminium capacity operated in China in February, based on production figures by the National Bureau of Statistics.
The country has more than 23 million tonnes a year of primary aluminium production capacity currently.
Lower production in the world's top producer and consumer of aluminium would help support international prices, which have fallen more than 8 percent so far this year.
The Ministry of Industry and Information Technology is preparing the move in the wake of a similar list for steel mills published last week, with the country's new leaders under pressure to tackle a festering pollution crisis that has become a source of increasing public fury.
"The ministry has not done (the list for aluminium smelters yet). It should be within this year," said an industry source who attended the meeting in Beijing but declined to be named due to the sensitivity of the issue.
He added that smelters that make it onto the list would receive government support through steps such as lower power fees and loans.
"Smelters that fall outside the aluminium list would be treated differently, such as getting less credit from local banks," said a source at a large smelter.
Companies not on the list would become less competitive and may be forced to cut production or close if domestic aluminium prices stay low, he added.
Like steel mills, the aluminium list is expected to include smelters that are medium or large-sized and meet environmental and energy-saving standards, the sources said.
Aluminium prices in China have hovered near 3-year lows as an economic slowdown saps appetite. The front-month contract on the Shanghai Futures Exchange, which reflects spot prices in the country, was trading at 14,650 yuan on Friday, down more than 3 percent so far this year.
Prices have remained low even though the state stockpiler bought a total of 400,000 tonnes of metal from smelters in two tenders in November 2012 and March 2013.
Some large smelters at the meeting earlier this week discussed possible coordinated cuts in production in a bid to limit supply and boost prices, but different production costs and requirements from local governments meant that these would not be possible to implement, the sources said.
About 700,000 tonnes a year of aluminium capacity has been idled so far in 2013, said Yao Xizhi, a senior analyst at state-research firm Antaike, adding that smelters may already have cut 500,000 tonnes a year of capacity by the end of last year.
An executive at a smelter in Guizhou, in southwestern China, estimated that combined idled capacity has reached 1-1.2 million tonnes currently given that some plants that produce primary aluminium for their own use in the manufacturing of semi-finished products have cut production.
More than 20 million tonnes of aluminium capacity operated in China in February, based on production figures by the National Bureau of Statistics.
The country has more than 23 million tonnes a year of primary aluminium production capacity currently.
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