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Henan Zhongfu suspends 30% of aluminum output, flags impairment up to 700M yuan

China's Henan Zhongfu Industrial Co. Ltd. suspended 30% of its electrolytic aluminum capacity, closing a 250,000-tonne-per-year smelter in the city of Linzhou in Henan.

The company said Dec. 12 that it is under increasing pressure due to regularly increasing coal prices as well as production restrictions related to the heating season, while aluminum prices have also decreased.

While Henan Zhongfu did not specify a time frame for the move, it estimated an impairment cost of 600 million to 700 million Chinese yuan related to the closure.

Aluminum Corp. of China Ltd. outlined similar plans in late November while saying aluminum prices in the country were at their lowest in two years.

Henan Zhongfu plans to transfer its capacity to Guangyuan in China's Sichuan province, according to a related Reuters report that cited a company official.

Henan enacts industry restrictions during the winter months, while Sichuan does not impose such restrictions and has hydroelectric infrastructure as an alternative energy source to coal for the smelting process.

As of Dec. 12, US$1 was equivalent to 6.88 Chinese yuan.