Third round of environmental inspections coming

In 24th April, approved by the CPC Central Committee and State Council, the third batch of central environmental protection inspection work officially started. Generally the inspection in each province will last one month from 24th April to 24th May, covering Tianjin, Shanxi, Liaoning, Anhui, Fujian, Hunan and Guizhou and focusing on understanding the provincial party committees and governments to implement the national environmental protection decision-making arrangements.


As the chart described, since last year July to now, there were three inspection teams distributed into 22 provinces to supervise local government to implement the environmental protection, however this is more powerful and totally different with the “2+26” which merely focuses on improving the air quality surrounding Beijing regions, covering Beijing, Tianjin, and individual cities in Shandong, Shanxi, Henan and Shandong.

If referring to the experience of other provinces in last year, it is likely all industry will be forced to cut or shut down by local government before the inspection. In early April, Hunan Nonferrous Chemical Company has excuse to perform maintenance to shut down but truly due to the inspection.

As for these 7 provinces, Guizhou and Shanxi are much more important, being rich in coal and bauxite, two kinds of main raw material to process aluminum. However, considering the current guideline to active energy market, I hold an optimistic attitude on the inspection on coal. As for other products, we can find in the next chart, with the exception of alumina, the proportion of anode and aluminum capacity these 7 provinces have is very limited. Even if in final they have to shut down or close, the impact for the whole market is acceptable.


At present, we have not found any alumina refinery to cut because of environmental protection problems. For current market, we still keep eyes on Shandong environmental protection and aluminium cuts.

In addition, China has 32 provinces excluding Hong kong and Macau. If the environmental inspection will reach hand to each one, apparently, Tibet, Xinjiang, Zhejiang, Shandong, Jilin, Sichuan, Qinghai, Hebei and Hainan should be in the name list. It is serious that the central environmental inspection will cross over “Heating Season Cut ” in major carbon and aluminium product regions.

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Chinese Aluminum, what’s going on?

In case you missed this story by Andy Home from Reuters.

“The Chinese aluminum machine is once again cranking up.

The country produced 2.75 million tonnes of the stuff in September, the second-highest monthly tally ever, exceeded only in June 2015.

Annualized run rates have accelerated by 2.16 million tonnes to 33.48 million over the last two months and China accounted for 55.7 percent of global output in September.

These figures, supplied to the International Aluminum Institute by China’s Nonferrous Metals Industry Association, come with a health warning, prone as they are to bouts of alarming monthly volatility.

But the trend is firmly upwards and appears to bear out a broad analyst consensus that a period of rare self-discipline by Chinese smelters was doomed to end sooner or later.

The reason that smelters are now turning the taps back on is largely one of price.

Shanghai aluminum prices have been on a tear since troughing below 9,000 yuan per tonne in November 2015.

The most actively traded contract on the Shanghai Futures Exchange (ShFE) has this week hit a near two-year high of 13,300 yuan.

It has comfortably outperformed the London price since the start of the year but there are grounds for caution about what is driving this supercharged rally.

It might yet all end in tears. And given Chinese exports of aluminum products are rising again, it may not just be local smelters who face a potential sudden reversal of fortunes.”

Industry consultants AZ China estimate 1.8 million tonnes of capacity has now been restarted. Another 2.5 million tonnes of new capacity, much of it ultra-low-cost, is also expected to be activated by the end of the year…

Read the full story HERE

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China aluminium production in July down

According to the International Aluminium Institute’s latest figures, aluminium production in China slipped to 2,724Kt in July, but still accounted for 55% of total monthly world outputs. The daily rate of production decreased to 88kt from 92kt, shrinking by 4% m/m. Actually, announcements of plans to shut capacity mostly came late in July, so we estimate production will go down further in the coming months, at least until more of the big new capacity in the Northwest is released.

Overall, China still needs a lot more capacity to exit the market, and this slip in the July number is not enough to warrant too much hope that things will change.   China aluminium production is still too strong for the level of demand.










For the world production of ex- China, July reached 2,196kt, increasing by 2% m/m. In addition, the y-o-y growth also remained positive at the level of 1.3%. However, as our chart shows, the rate of growth is trending down, even those it is still in positive territory.



This mainly resulted from cuts in America, and more seriously in South America. In contrast, outputs in Asia (ex China), the Middle East (GCC in the chart) and Europe all sustained positive growth in constant months.


For Asia, since year start, the y-o-y growth is still at the level of 20%. To date, monthly production already recovered to 247kt, with expansions of capacity in Malaysia and India.

If you are a subscriber to our Pipeline Report, you surely found the new page of ROW detail, in which you can clearly find that the expansion plans in next three years could add a lot more capacity – a point that cannot be ignored.

Alcoa Shines a Light on China’s ‘fake semis’ Trade

China exported 2.5 million tonnes of unwrought aluminum and aluminum products in the first half of this year.

That was 35 percent, or 650,000 tonnes, higher than the same period of 2014.

Most of what leaves China is in the form of semi-manufactured products. The rest is largely aluminum alloy with a very small amount in the form of primary metal, the stuff that’s traded on the London Metal Exchange.


Aluminum Glut Dents Alcoa’s Prospects

Beijing’s panicked reaction to sliding Chinese stock prices must be causing a few ripples of anxiety at Alcoa, too.

When Alcoa reports second-quarter results Wednesday, investors will be looking for any glimmers of a rebound in metal prices, especially aluminum. The company’s stock has suffered, plunging 30% so far in 2015.

Aluminum alloy, for instance, fetches about $1,644 a metric ton on the London Metal Exchange,