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Markets // Market Analysis

Chinese smelters in environmental shutdown

Friday, 28 July 2017

Tin smelters based in the city of Gejiu in Yunnan Province, China have been ordered to cease production temporarily for environmental reasons.

Documents published by the Gejiu Environmental Protection Bureau reveal that all local tin smelters, except for the smelter of leading producer Yunnan Tin, have been ordered to cease production between July 26 and August 1. This is because sulphur dioxide emissions have been reported as exceeding current environmental limits. Major tin smelters affected include Yunnan Chengfeng, Gejiu Zili, Gejiu Non-ferrous Metal, Gejiu Yunxin, Gejiu Kaimeng and Gejiu Jinye.

ITRI View: This is the second major Chinese smelter shutdown for environmental reasons this year, following a similar hiatus for inspections related to sulphur dioxide emissions in April. Should the halt only last for one week as currently indicated then the impact on supply should be minimal, particularly as refined tin stock levels inside China remain high. However, we understand that the restart of operations will depend on the results of environmental monitoring, which raises the possibility of prolonged period of shutdown. Regardless, it is clear that Chinese authorities are becoming increasingly strict in ensuring smelters are complying with environmental regulation, particularly when it concerns air pollution.

1 August Update: We understand that a number of the affected smelters will be restarting operations this week. Several smelters have used the enforced shutdown to carry out maintenance and may be inactive for a longer period while this work is completed.

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