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Staggered suspension in Henan to affect aluminium consumption in Jul-Aug

iconJul 31, 2018 18:42
Source:SMM
Some 30,000 mt of primary aluminium consumption will be affected in Gongyi, as local downstream processors stagger suspensions

SHANGHAI, Jun 31 (SMM) – Some 30,000 mt of primary aluminium consumption is expected to be affected in Gongyi city of Henan, as local downstream processors were required to stagger suspensions during July and August.

Excluding the top 30 enterprises, all gas emission-related industrial plants in the city are required to suspend their smelting furnaces for a month. Most local producers chose to cut output by 50% each in July and August. Plants will determine their suspension schedule in that period.

Smelting capacity across cast coil producers was cut by half and this drove producers to use cast coil billet for production instead of aluminium ingots.

Cast coil plants were more significantly affected in the first half of July, as they had to procure billet and step up production at the same time. Pressure eased in the second half of July as billet purchases arrived and the number of orders fell. 

SMM data showed that there are 215 cast coil production lines in Gongyi, 86 of which belong to the top 30 enterprises. In the remaining 129 production lines, 67 were ordered to suspend. 

Slower consumption depressed local aluminium prices and the price spread between spot aluminium ingot in Gongyi and Shanghai widened to 100 yuan/mt as of Tuesday July 31, from 50 yuan/mt two month ago. 

SMM assessed A00 aluminium ingot in Gongyi at 14,260-14,280 yuan/mt on July 31. 

Market commentary
Aluminium ingot
Cast coil

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