Xinfa Group closes 500,000 tonnes of aluminium capacity after explosion in Xinjiang plant

Reuters reports that Xinfa Group, one of China’s top aluminium producers, has closed an aluminium production line after an explosion at a plant in the north-western region of Xinjiang. The blast took place at its electrical transformer on August 18. The news is confirmed by an unidentified company source.

The accident has led to the shutdown of around 500,000 tonnes of annual smelting capacity at the plant at north of the Xinjiang capital of Urumqi.

After the supply concerned created by the Typhoon, which affected a smelter of Hongqiao group in Shandong province, this capacity closure news has generated further tension in the market shooting SHFE aluminium price to an almost 10 months high on Tuesday, at RMB 14,455($2,046.58) per tonne. Though the contract consolidated, limited downside room is expected in near term.

“The temperature in the pot room got too high and there was a small explosion, so we shut it down for safety reasons,” the source said.

According to Metal Bulletin, the total closure period is likely to last at least three months while other sources say production will not return until the end of 2019. The company source says Xinfa is currently working towards restarting the production as soon as possible. The company has about 1.9 million tonnes of smelting capacity in Xinjiang.

An industry analyst in talk with the company said there was initially a leakage at the plant “a few days ago,” before the explosion took place, causing 100,000 tonnes of production to be suspended.  A second analyst said the price would continue to stay high, if the plant cannot resume production soon, as the market is expecting an outage of up to five months.

Consultancy AZ China said that 500,000 tonnes of capacity in Xinjiang had been shut down, without naming the company affected. “Bottom line, a cold potline means an outage of at least 2-3 months,” Paul Adkins, MD, AZ China said.