Henan Province issued its air pollution control plan for the 2018 heating season, which still demands more than 30% of capacity cuts for aluminum smelters and alumina refineries, more than 50% of capacity curtailment for aluminum fabricators, and full closure for CPC calciners and carbon plants. However, the plan also states that smelters that have reached the national emission limits by the end of October 2018 will be allowed to shut down only 10% of capacity. CPC calciners and carbon plants that have met ultra-low emission limits by the end of October 2018 will also be permitted to operate at half of capacity in the winter.

Among the six provinces affected by the winter cuts policy, Henan Province has been the best policy follower. This provincial plan, prior to the central government rolling out any new policy, indicates that Henan will still be a bellwether of air pollution control, which thus has a strong implication on the future policies of the aluminum industry.

From the policy point of view, while the terms for aluminum smelters appear to be relaxed, the requirements for CPC calciners and carbon plants have tightened up, which might fuel further price rises in the anode market that has been in short supply.

This policy may also provide an answer to the question of whether or not to restart the shuttered capacity after March. The cost of production in Henan has been among the highest nationwide. If aluminum prices maintain the current level, there will not be enough financial incentive for smelters in Henan to restart the curtailed capacities, not to mention the recurring costs for 2018’s closure otherwise.

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