November 22, 2018 / 9:43 AM / 20 days ago

China aluminum smelter Xinfa granted winter cut exemption - documents

BEIJING (Reuters) - Xinfa Group, one of China’s top aluminum smelters, will not have to cut metal production in its home city of Liaocheng this winter and will only have to reduce alumina output by 10 percent for two months, according to city government documents.

The measures are much more lenient than during the 2017/18 winter, when China imposed a 30 percent output curb on aluminum and alumina production in 28 northern cities, including Liaocheng, located in Shandong province, for the four-month heating season to reduce air pollution.

Subsidiaries of Xinfa, which has around 1.4 million tonnes of smelting capacity in Liaocheng, were included on a list of exemptions for the winter heating season published by the Liaocheng Economic and Information Technology Committee and reviewed by Reuters.

An official at the Liaocheng committee confirmed the authenticity of the documents, adding that some adjustments to the overall winter plan may still be made.

Amid expectations of less stringent curbs, Shanghai aluminum prices have fallen about 8 percent since the end of August and hit a two-year low on Wednesday. Low prices are, however, leading to some smelter cutbacks because of squeezed margins.

The documents also showed an alumina refinery owned by Xinfa that can produce 4.4 million tonnes per year would have to cut production by 10 percent from Dec. 1 to Jan. 31. Alumina is a substance that is smelted into aluminum metal.

Northern China’s heating season runs from Nov. 15 to March 15 but Beijing is allowing cities to determine their own cuts this winter. The Shandong provincial government had earlier stipulated that cities should impose a minimum of two months of winter cuts.

The alumina restriction will “not hurt” Xinfa, according to a company source. Xinfa, China’s second-biggest private aluminum smelter after China Hongqiao Group, the world’s top producer of the metal, did not immediately respond to a request for comment.

It remains unclear what winter restrictions will be placed on Hongqiao, which is based in the city of Binzhou, also in Shandong.

Xinfa also owns around 2 million tonnes per year of aluminum smelting capacity in China’s Xinjiang region.

Reporting by Tom Daly; Editing by Christian Schmollinger

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