In 24th April, approved by the CPC Central Committee and State Council, the third batch of central environmental protection inspection work officially started. Generally the inspection in each province will last one month from 24th April to 24th May, covering Tianjin, Shanxi, Liaoning, Anhui, Fujian, Hunan and Guizhou and focusing on understanding the provincial party committees and governments to implement the national environmental protection decision-making arrangements.
As the chart described, since last year July to now, there were three inspection teams distributed into 22 provinces to supervise local government to implement the environmental protection, however this is more powerful and totally different with the “2+26” which merely focuses on improving the air quality surrounding Beijing regions, covering Beijing, Tianjin, and individual cities in Shandong, Shanxi, Henan and Shandong.
If referring to the experience of other provinces in last year, it is likely all industry will be forced to cut or shut down by local government before the inspection. In early April, Hunan Nonferrous Chemical Company has excuse to perform maintenance to shut down but truly due to the inspection.
As for these 7 provinces, Guizhou and Shanxi are much more important, being rich in coal and bauxite, two kinds of main raw material to process aluminum. However, considering the current guideline to active energy market, I hold an optimistic attitude on the inspection on coal. As for other products, we can find in the next chart, with the exception of alumina, the proportion of anode and aluminum capacity these 7 provinces have is very limited. Even if in final they have to shut down or close, the impact for the whole market is acceptable.
At present, we have not found any alumina refinery to cut because of environmental protection problems. For current market, we still keep eyes on Shandong environmental protection and aluminium cuts.
In addition, China has 32 provinces excluding Hong kong and Macau. If the environmental inspection will reach hand to each one, apparently, Tibet, Xinjiang, Zhejiang, Shandong, Jilin, Sichuan, Qinghai, Hebei and Hainan should be in the name list. It is serious that the central environmental inspection will cross over “Heating Season Cut ” in major carbon and aluminium product regions.