Environmental inspections trigger massive production cuts among China aluminium producers

China government sent environmental protection teams to seven regions from November 24 to 30 to supervise environmental protection work, including Beijing, Shanghai, Guangdong, Hubei, Chongqing, Shaanxi and Gansu. SMM conducted a survey to find out the impact of the inspections on smelter owners.

Since the beginning of 2016, Chinese government has taken a tough stance in environmental protection inspections. Domestic aluminium and alumina producers are mostly large-size producers equipped with environmental protection facilities, and so they have suffered little impact from the inspections, except one aluminium producer in central China. The producer was requested to shut down its captive power plant and to source electricity from power plant directly in the previous round of inspections.

SMM report says that one alumina producer in Chongqing has been requested to cut alumina capacity by 350,000 tonnes for environmental upgrading after excessive discharge of pollutants. The producer is now running at 350,000-tonne alumina capacities, with output all for its aluminium production use.

Domestic aluminium processing producers are facing major impact from environmental protection inspections, SMM survey finds. The stricter inspections led to closures of aluminium billet producers in Inn Mongolia’s Huolinhe, switching from coal to natural gas at copper plate/strip, sheet and foil producers in Gongyi, and production halts at small and medium coal-fired aluminium extrusion producers in Hebei.  

Foshan government introduced the Plan for Promoting Air Pollution Prevention and Control Action on Aluminum Extrusion Producers in 2016-2017. According to the plan, a new round of inspections would be carried on all 157 aluminium extrusion producers in the region, and all producers would be requested to complete clean energy upgrading before late June 2017, or they would be shut down. Currently, 51 producers in Nanhai have completed the upgrading, and another 75 producers will finish the overhaul by late October.

{googleAdsense}

Some small and medium-size producers have closed their smelting furnaces for severe energy pollutions, shifting raw material from aluminium ingot to aluminium billet.

SMM believes that the impact from environmental protection inspections will be typically a regional one, and will be limited on the overall industrial chain. Hence, the impact on price will be small in all price influential factors. Attention should be paid more to whether or not producers violating the rules will upgrade their units to meet requirements, so as to give more consideration to environment and future generations than costs and profits.