Chinese aluminium smelters located in the Yunnan province of southwestern China began reducing their production capacity by an aggregate of 1.15 million metric tons (equivalent to about 1.27 million short tons) this week. This reduction is in response to production curbs which are anticipated to last until April, according to industry sources.
“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,” said Li Lin, the aluminium director at AZ Consulting.
Yunnan’s aluminium production capacity stands at roughly 5.7 million metric tons (around 6.28 million short tons). This makes Yunnan the fourth-largest aluminium-producing region in China, contributing to about 12% of the nation’s entire capacity.
In recent times, the region’s aluminium capacity has witnessed growth, largely due to the availability of affordable hydropower. However, ongoing water shortages are negatively impacting the total output.
Historically, these smelters reduced their production in September of the previous year, only to restart in late June.
Li Lin added, “Smelters are expected to complete the latest production cuts by Nov. 5, resulting in a reduction of 1.15 million metric tons capacity.”
Attempts to reach China Southern Power Grid for comments were unsuccessful.
Key aluminium companies operating in Yunnan encompass Yunnan Aluminium, China Hongqiao Group, Yunnan Shenhuo Aluminium, and Qiya Group.
A manager from one of these aluminium firms informed Reuters that they commenced the production cuts on Wednesday. The manager also mentioned that this curtailment is expected to last until the onset of the rainy season in 2024. This individual opted to remain anonymous due to not having the clearance to communicate with the press.
A representative from the chairman’s office of Henan Shenhuo Coal & Power, the holding company of Yunnan Shenhuo, conveyed to Reuters that their operations in Yunnan are functioning as usual.
Other companies in the region did not reply to outreach for remarks.
Typically, the dry season in Yunnan spans from November through April.
