Key Chinese Metals Hub to Curb Output to Save Power, Cut Carbon

Bundles of aluminum ingots sit stacked on the side of a road near a stockyard in China. (Photographer: Qilai Shen/Bloomberg)

Key Chinese Metals Hub to Curb Output to Save Power, Cut Carbon

China’s southwestern province of Guangxi, a major metals producer, will cut output of energy-intensive materials in response to Beijing’s campaign to save power and restrain emissions, according to people familiar with the situation.

Local government officials gathered earlier Monday to decide on the plan, which will affect output over the rest of the year, said the people, who asked not to be identified as they aren’t authorized to speak publicly. The meeting followed comments last week from Vice Premier Han Zheng, who called for nationwide curbs on industrial activities that produce too much pollution or fail energy-intensity standards.

Han’s order signals a new round of scrutiny for industries including aluminum and steel. China is the world’s biggest producer of both, and prices have hit multi-year highs in recent months, in part due to supply constraints arising from the central government’s policies.

The Guangxi government has asked for production cuts in sectors including aluminum, alumina, steel, ferroalloys and cement, the people said. Some aluminum and alumina smelters will be required to cap output in September at half their capacity, while some new smelting projects will be delayed, they said. Among metals, producing aluminum is particularly electricity intensive, and Guangxi is a major hub for both the lightweight material and its feedstock alumina. 

Calls to Guangxi’s industry bureau seeking comment weren’t answered.

The government also ordered local steel mills to cut operations, which may affect at least 980,000 tons of output in September, researcher Mysteel reported. Steel production accounts for about 15% of China’s emissions.

Aluminum prices in Shanghai rose 2.9% on Monday and closed at the highest level since 2006. The metal, which is used in everything from airplanes to window frames and beverage cans, has risen almost 50% over the past year. Its gains have accelerated in recent months as China has been forced to scale back production due to a power crunch exacerbated by scorching summer temperatures.

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