China Small Secondary Smelters Shut down on Environmental Checks, SMM Reports

SHANGHAI, Apr. 27 (SMM) – China launched the third round of environmental protection inspections on April 24 in seven provinces, including Tianjin, Shanxi, Liaoning, Anhui, Fujian, Hunan and Guizhou. Will stricter environmental checks strike secondary smelters with large pollution? And will this affect downstream demand? SMM surveys domestic smelters and finds followings.

There are more than 90% of small secondary lead smelters in Hebei, Henan and Anhui closing down in April while local large secondary lead smelters hold steady production. Output and operating rate at Henan Yuguang Gold & Lead, which is less affected, remain stable with ample inventory. Jiyuan Jinhui Lead has ramped down 20%-30% of production, reducing inventory further. Anhui Huaxin Lead Industry Group has halved production with no inventory on hand, and person in charge expects to cut output further, or halt production, due to environmental factor.  

Small secondary lead smelters have been suffering low profits. This, coupled with China’s third round of environmental protection inspections, will make output resumption at small secondary lead smelters harder, SMM foresees. As industrial structure will be optimized further, output proportion from large secondary lead smelters will increase year by year.

SMM surveys tin enterprises in Anhui, Hunan and Fujian, and finds that Ma'anshan Weitai Tin Industry, not affected by the inspection, holds normal production.

However, Hunan, one of tin ore main producing areas, owns small amounts of tin smelters. Those tin smelters, except Chenzhou Yunxiang Mining and Metallurgy, all closed down, including Hengyang Wangfa Tin and Leiyang Jinxing Tin Products. Besides, Xianghualing Tin Industry suspended dressing plant production for two weeks. In addition, local tin mines also halted mining in response of tight explosive supply. Local tin enterprises said the output suspension will continue to early or mid-May.

There are many small tin foil makers in Fujian’s Zhangzhou, main producing area of tin foil. All local tin foil producers have shut down for several days due to environmental factor, SMM learns. But, as tin consumption is low during tin foil production, with 700-800 tonnes per month, the closures make small impact on tin consumption.

Most secondary aluminum smelters in Fujian are small, with monthly output at hundreds tonnes, except SIGMA and Fujian Huayin Aluminum Industry. However, local government already launched strict environmental protection inspections in the second of 2016, and clamped down most unqualified smelters. As large secondary aluminum smelters, including SIGMA and Fujian Huayin Aluminum Industry, have equipped environmental facilities, this round of inspection makes little impact. Those smelters cut output slightly to meet emission standard entirely. Secondary aluminum industry has entered off-season in response of poor demand from auto market. Secondary aluminum price will not increase, as the environmental checks make little effect.  

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