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Aluminium smelters in China's Xinjiang told to cut output

Aluminium smelters in China's Xinjiang told to cut output

An employee operates a crane to lift aluminium wires at a warehouse in Zouping county, Shandong province, China, on Apr 18, 2018. (Photo: China Daily via REUTERS)

BEIJING: A prefecture in China's Xinjiang region has imposed output limits on five aluminium smelters starting from this month as part of efforts to stamp out illegal production, sending Shanghai aluminium prices to a 13-year high.

Across the five smelters, the monthly limits represent a 10 per cent reduction in production from output levels in the first seven months of this year, according to Reuters calculations.

Xinjiang is a major smelting hub in China, accounting for almost one-fifth of supply in the world's biggest producer and consumer of aluminium.

The region's Changji prefecture has ordered smelter East Hope to keep monthly production at 54,000 tonnes starting from August, according to a government document reviewed by Reuters, whose authenticity was confirmed by a Xinjiang metals association official.

That is some 28per cent below its average output of around 75,000 tonnes in January-July, according to Reuters calculations based on figures in the document, which adds that East Hope can also produce a maximum of 800,000 tonnes this year.

The other companies affected are Qiya Aluminium, Xinjiang Shenhuo, Xinjiang Jiarun and Tianlong Mining. Their combined annual production in 2021 must not exceed Changji's authorised capacity of 3.05 million tonnes, said the document.

Aluminium prices in China have rallied this year after various Chinese regional governments - under pressure to reduce emissions - restricted smelters' power consumption.

Prices climbed as much as 1.1 per cent in Thursday's night session on the Shanghai Futures Exchange to 20,750 yuan (US$3,201) a tonne, the highest since Aug. 22, 2008.

Source: Reuters

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