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China Shandong details aluminum sector winter output cuts: ministry

Hong Kong — Shandong Province, North China, released a detailed list of alumina andaluminum producers intending to cut their output in the winter heating seasonfrom November 15, 2017, to March, 15, 2018, the Shandong branch of theMinistry of Environmental Protection (MEP) said in a circular Friday.

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Xinfa Group, with a 1.58 million mt/year unalloyed aluminum ingot and rodoutput capacity in Liaocheng City, Shandong, would shut 30%, or 564electrolytic cells, out of its 1,880 cells in winter, equal to 381,900 mt/yearof output capacity, MEP data showed.

Xinfa Huayu Alumina in Chiping County, Shandong, with an alumina outputcapacity of 7 million mt/year, will shut four of its 11 production lines inwinter, equal to 2.6 million mt/year capacity.

Meanwhile, in Zhanhua District, Binzhou City, Shandong, 320,000 mt/yearrefined aluminum producer Binbei New Material will shut all its 240electrolytic cells in winter from November 15, 2017, to March 1, 2018, withthe No.1 production line of its first phase alumina plant and the No.1 line ofits second phase alumina plant asked to shut in winter, data from the Binzhoucity government showed.

In Wudi County, under Binzhou Administration, 500,000 mt/year aluminaproducer Wudi Qixing Hi-tech Aluminum will shut all its output capacity inwinter, while in Binzhou, Beihai Huihong New Aluminum Profiles with refinedaluminum output capacity of 600,000 mt/year was asked to shut half of its 444electrolytic cells, data showed.

In Zouping County, Shandong, alumina producers -- 4 million mt/yearWeiqiao Aluminum & Power and 4 million mt/year Gaoxin Aluminum & Power -- wereasked to cut a total alumina output capacity of 2.5 million mt/year in winter,city government data showed.

During winter, Weiqiao Aluminum & Power was asked to shut 1,484 of its3,924 electrolytic cells -- the plant has aggregate aluminum smelting capacityof 4.25 million mt/year, its data showed.

Binzhou City requires the aluminum sector to cut output by 30% and thealumina sector -- referring to alumina plants using bauxite for processing,excluding alumina new materials and alumina grinding balls -- to cut outputby over 30% in the winter heating period, its data showed.


Meanwhile, despite the start of output cuts by the Chinese aluminumsector since mid-November, Chinese domestic aluminum prices were weaker overthe past few weeks, data from Shanghai Futures Exchange showed.

SHFE's most active 1801 aluminum futures contract prices over Wednesdayto Friday were much less than Yuan 16,235/mt ($2,435) November 1, with theFriday price closing at Yuan 14,600/mt, up from Yuan 14,565/mt Thursday, SHFEdata showed.

A spokesman for Hongqiao Group, which has aluminum bases in Zouping,Weiqiao, Binzhou and Huimin, told Platts the output cuts were not the onlyfactor affecting prices in the sector.

Analysts have predicted Chinese aluminum prices will stay weak during thefirst half of 2018 due to high domestic stocks, turning stronger in H2, butthe Hongqiao spokesman said it was still too early to predict next year'sprices as the impact of the output were yet to be seen.

"Market participants are skeptical of the impact of the output cuts onthe market, with prices being affected by speculative activities," he said.

China's social aluminum stock volume (stocks at producers, processingplants, traders, SHFE's warehouses, and cargoes in transit) is expected toreach 2.2 million mt before the Lunar Chinese New Year (mid-February 2018), upabout 500,000 mt from current levels, data from State Development & InvestmentCorp. showed.

--Joshua Leung,

--Edited by Jonathan Loades-Carter,