Kickstarted by the government’s penalizing of unlawful aluminum refining, China Hongqiao Group Limited has begun to reduce its production rate. As a result, smaller aluminum smelters in China have received market shares.
The aluminum company is a large sector of Shandong Weiqiao Pioneering Group Company, and despite the importance of the situation, it failed to provide any information on how much it will reduce its production or how quickly the process will be executed when contacted for an estimate.
Knowledgeable insiders have claimed that the parent company began with a yearly reduction of 250,000 metric tons of aluminum on June 20th. These insiders wish to remain anonymous to protect themselves against any repercussions of giving out private information, and the attempt to request a comment from a Weiqiao company head was unsuccessful.
Recognizing its unbeatable title as the main aluminum producer in the world, the country is finally making a legitimate effort to make cuts to its aluminum refining, in hopes of minimizing the industry’s material surplus of aluminum sheet and abiding by legal rules once again.
In a rather sudden course of action this past April, China’s number one economic maintenance corporation ordered the shutdown of all aluminum smelters in the country that broke the rules of the industry’s environmental code. Several weeks earlier, the corporation planned to do the same during the winter season, the time of year when pollution is at its worst. These actions will quickly decrease the 40 million tons of aluminum that would have been processed this year.
These ambitious plans clearly demonstrate China Hongqiao Group Limited’s dedication to the government’s plan for the aluminum industry, and these plans also indicate a very real change occurring in the market, no matter how slowly that change is taking place. Even Xinjiang province, which houses the country’s second biggest aluminum supplier and producer, has begun to pay more attention to the environmental ramifications of all of its smelting locations.
Although it seems China is more dedicated to reducing its aluminum production, other high-production companies are still sceptical. China’s cuts have caused a significant increase in London Metal Exchange’s success, improving by more than one-tenth. Its aluminum is now valued at $1,892 per ton. Both the Aluminum Corporation of China Limited and Yunnan Aluminum Company have reaped the rewards of production cuts as well, experiencing price increases of 2.2% and 4.4% respectively.
Global Markets Asia inferred that 3.1 million tons of aluminum in China is unapproved, which makes up 8% of the whole country’s production capacity. More cuts are expected to follow later this year to target this problem, specifically the processing halts that will occur over the winter months. With these regulations in place, the surplus issue in the aluminum industry should be inexistent very soon.