China's Yunnan begins aluminium production cuts as dry season begins

China Hongqiao

01/11/2023 05:58

BEIJING, Nov 1 (Reuters) - Chinese aluminium smelters in
southwestern Yunnan province started cutting a total of 1.15
million metric tons of capacity this week, to comply with curbs
expected to last until April, a smelter manager and two analysts
said. 
    The curb, issued by China Southern Power Grid on Oct. 30,
asked local producers to cut their production by between 9% and
40% of capacity, according to Li Lin, aluminium director at AZ
Consulting.
    Yunnan, with around 5.7 million tons of capacity, is the
fourth biggest aluminium producing region in China and accounts
for around 12% of the country's total capacity.
    Aluminium capacity has been growing in the region in recent
years, benefiting from cheap hydropower, but water shortages are
now taking their toll of the total output. 
    The smelters cut their production last September and only
resumed in late June.
    Smelters are expected to complete the latest production cuts
by Nov. 5, which would reduce 1.15 million metric tons capacity,
Li said. 
    China Southern Power Grid was not immediately reachable for
comments.
    Major aluminium producers located in Yunnan include Yunnan
Aluminium  000807.SZ , China Hongqiao Group  1378.HK  and Yunnan
Shenhuo Aluminium and Qiya Group.
    A manager at one of the producers told Reuters they had
started to cut production on Wednesday and that the curb would
last until the rainy season begins next year.
    The person declined to be named because they were not
authorised to speak to the media. 
    A person from the chairman's office at Henan Shenhuo Coal &
Power  000933.SZ , the parent company of Yunnan Shenhuo, told
Reuters on Wednesday operations in Yunnan were running normally.
    The other companies did not respond to requests for comment.
    Yunnan's dry season typically runs from November to April.
    

 (Reporting by Siyi Liu, Dominique Patton and Beijing Newsroom;
editing by Miral Fahmy)
 ((Siyi.Liu@thomsonreuters.com;))