China’s electrolytic aluminium price may see slight rise in short term as production hub Yunnan suffers power shortage

 

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China’s electrolytic aluminium prices may see a slight increase in the short term as Southwest China’s Yunnan province, one of the country’s major aluminum production hubs, reduced production due to power shortage caused by drought.

Yunnan, a traditional hydropower province, has faced a severe power supply shortage due to drought. According to Chinese news outlet Caixin, since September 10, the province’s electrolytic aluminum industry has faced power restrictions, affecting about 500,000 tonnes of its electrolytic aluminum production capacity.

Yunnan Shenhuo Aluminum Co, one of Yunnan’s major aluminum producers, said it received a notice from the local government to temporarily curb production by 10% of its capacity, and the duration of the reduction is still uncertain, domestic news outlet Cailianshe reported. 

Electrolytic aluminum enterprises are the major users of electricity in Yunnan. In July this year, the power consumption of the firms accounted for about 40% of the province’s industrial electricity consumption.

“The reduction of aluminum production in Yunnan due to electricity restrictions may boost domestic aluminum prices, but will have little impact on long-term price trend, said Zhou Xiang, Assistant to the Dean at China Metallurgical Industry Planning and Research Institute.