Chalco Cuts 30% Metal, Alumina Capacities in Henan Jiaozuo Plants

Aluminum Corp of China (Chalco) has started cutting back 30% of the capacity at its refinery in Henan's Jiaozuo city last week, ahead of the originally scheduled winter cutback policy deadline in mid-November, a company official confirmed to S&P Global Platts Wednesday.

The Jiaozuo local authorities have also issued a statement about the cuts last week, citing environmental protection factors.

"The air in Jiaozuo is very bad, that's the main reason we're starting the winter cuts earlier in that area," the Chalco officia said.

"There are no plans for early winter cuts in our other plants in Henan or other regions yet, but we cannot rule out the possibility," he added.

Chalco's Zhongzhou refinery located in Jiaozuo, has an alumina capacity of 2.6 million mt/year. It sold its stake in the Jiaozuo Wanfang smelter, which has an aluminum capacity of 430,000 mt/year, earlier this year.

Jiaozuo Wanfang has also started cutting 30% of its metal production from September 19. The Chalco official declined to provide details on current run rates at the plants, but said the full 30% capacity cuts, which started on September 19, should be completed within the month.

News of the cuts boosted domestic Chinese aluminum and alumina prices last week, and is likely to support higher price levels in the near term, market sources said.

The front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 16,945/mt ($2,586) on Wednesday, up 3.4% on the day, 3.6% on the week, and 3.8% on the month.

Domestic spot alumina prices were heard trading around Yuan 3,450-3,500/mt cash to partial credit terms on Wednesday, up from Yuan 3,350-3,400/mt previously.