China's Henan Wanji Cuts 30% Alumina, Aluminum for Winter

China's Luoyang Xiangjiang Wanji Aluminium in Henan province has shut partial alumina refinery and aluminum smelter capacity on Wednesday in accordance with the central government's winter capacity cut policy, a company source told S&P Global Platts.

The Chinese government-imposed winter cuts of 30% aluminum and 30% alumina capacity starts on November 15, 2017, and ends March 15, 2018.

"We just started the cuts today, and will not resume until after March 15 next year, which is what the government requires," a Wanji refinery source said. "It's too early for prices to be impacted yet, as the market will need a few days to see who else confirms cuts and how much has been cut," he added.

Wanji's refinery has a current running alumina capacity of 1.4 million mt/year and produced about 1.2 million mt in 2016.

Output last year was partially impacted by red mud issues, when a barrier to its red mud storage facilities broke in August 2016.

In 2017, an estimated 70,000 mt of alumina output will now be affected by the 30% cuts, and the refiner expects to produce about 1.3 million mt for the year.

Wanji's aluminum smelting operations in Henan has also started cutting 30% of its operating rate on Wednesday, a source from the smelter said.

"We started the cuts today and should complete all 30% within a week," the smelter source said. "When we resume will depend on market conditions at the time after mid-March next year. If prices are good, we'll restart quickly, else we might wait a while," he added.

The smelter source also said how the market will be impacted will depend on how the overall cuts in the country pan out in the near term.

"But in general, we expect most of the required cuts will happen. The government is very strict and there are inspections almost every day, so the cuts will have to happen," he said.