LONDON (Reuters) – Winter is coming in China and that means large swaths of industrial capacity in the regions around Beijing and Tianjin must cut production. Chinese President Xi Jinping has promised “blue skies” will replace the choking smog that envelops many cities in the country’s industrial heartlands, particularly over the “winter heating” months.
Heavily polluting industries in the targeted regions will therefore have to reduce output between November and March. If that means massive disruption to supply chains, so be it. Aluminum production will be cut by 30 percent.
Ironically, the “green” metal, used in ever greater quantities by automotive makers looking to reduce vehicle weight, is made using coal power in this part of China. And coal is enemy number one in Beijing’s eyes.
How much production will be cut is of crucial significance to the aluminum market since China is the world’s largest producer and a huge exporter of semi-manufactured aluminum products.
The lack of a ready answer to that question is keeping the London aluminum price expectantly poised just below September’s five-year high of $2,199 per tonne.