Chinalco to Cut 2 Mln T of Alumina Capacity This Winter

Chinalco, China's biggest state-run aluminium producer, is cutting its alumina capacity by 2 million tonnes this winter to comply with pollution-related restrictions on heavy industry, an executive said on Wednesday.

The company, formally known as Aluminum Corp of China, started to make the cutbacks at its alumina refineries in Henan and Shandong last month, vice president Lu Dongliang told Reuters. Lu was speaking on the sidelines of the China Aluminum Week conference in Fuzhou.

Wednesday marks the first day of China's peak winter heating season, when aluminium and alumina producers in 28 northern cities must reduce their output by at least 30 percent for environmental reasons. A range of industrial plants have been ordered to curb output this winter as Beijing seeks to tackle pollution.

Chinalco will not have to cut any metal output over the winter, Lu said, adding that the alumina restriction would be lifted on Mar. 15.

Aluminium prices are up by around 23 percent so far this year, partly driven by capacity closures in China, but alumina has shot up even more in recent months amid fears of a raw material squeeze this winter.

Speaking earlier at the conference, Chinalco chairman Ge Honglin had praised efforts to cut smelting capacity and urged the industry to speed up work to "reduce the imbalance" amid persistent oversupply.

Chen Quanxun, chairman of the China Nonferrous Metals Industry Association, told delegates China had eliminated 5.66 million tonnes of low-quality aluminium capacity in recent years.

However, Liu Danyang, deputy director of the trade remedy and investigation bureau in China'sMinistry of Commerce, said China should avoid "impulsive" capacity shutdowns in the face of heightening aluminium trade frictions with the United States and other countries.

Punitive U.S. duties of 100-200 percent on Chinese aluminium foil imports are "very unfair" on China's aluminium industry, Liu said, although he noted that 90 percent of China's aluminium was consumed domestically.