Hongqiao cuts aluminium output guidance

BEIJING: China Hongqiao Group, the world’s biggest aluminium producer, slashed its 2019 production guidance by up to 300,000 tonnes, or almost 5%, ater recent flooding on its premises, as it posted a sharp rise in first-half profits.

Hongqiao, which initially denied any impact on its operations ater Typhoon Lekima tore through the smelting heartland of Shandong earlier this month, admited that “some of the group’s production workshops were damaged by the rain, which might bring adverse impact on production.”

“According to the preliminary assessment, it was estimated that the group’s production volume of aluminium products for 2019 will decrease by 200 to 300 thousand tonnes as a result,” it said in a filing to the Hong Kong stock exchange, noting that further assessment was required.

Shanghai aluminium prices struggled to move away from two-year lows in the first half of 2019 but hit a nearly 10-month high this week ater a smelter shut down 500,000 tonnes of annual production in Xinjiang and investors worried about the impact of flooding in Shandong.

The floodwater has now receded, Hongqiao said on Friday. “Save for the aforesaid affected production capacity, the group’s business operation is in normal condition.”

Hongqiao had in April referred questions on production capacity to a note from brokerage Industrial Securities, which said the smelter’s 2019 output guidance was 6.3-6.35 million tonnes. A 300,000 tonne dent in production at the lower end of that range is equivalent to 4.8%, while a 200,000 tonne impact at the higher end is 3.1%.