We have received reports that an explosion has occurred at the Xinjiang plant owned by Xinfa. One report we have seen says that the explosion occurred in the power station, presumably a rectifier or transformer. If that’s the case, then the plant should have been able to conduct a reasonably orderly shutdown, and more importantly, there should have been no injuries.

We are still checking the details with the plant. At this stage we only know that the alleged explosion occurred, but we have not established whether it was the new line that was just starting up, or one of the other lines.

We will bring more reports as news comes to hand.

Update: No sooner that we published this than we got further confirmation that an accident has occurred. We spoke to a representative of the plant, who can’t be named because he is not authorised, and he confirmed that an accident has occurred. SMM have published a story that the explosion was in an electrical control cabinet attached to one of the pots, and that preliminary investigations suggest it will take 2 months to restore the line.

An explosion in a control cabinet makes less sense. The circuitry should have been robust enough to limit any problems to just the cell that was affected. We will continue to monitor and report as more news comes to hand.

The loss of 400,000t of new capacity should not have too big an impact on the physical market, though one can never underestimate knee-jerk reactions. I have seen a Macquarie Research note that says that it will “delay the emergence of a surplus in the Chinese market “, but new aluminium potlines have a slow ramp up anyway, and there is still plenty of new metal units coming from restarted lines as well as new capacity that is due to enter the market in the remaining months of this year.