Yunnan electrolytic aluminum makers halt production, ration electricity due to power shortage

(Yicai Global) Sept. 16 — Electrolytic aluminum producers in China’s Yunnan Province have received notices from the local government to start power rationing or halt production amid the coronavirus-induced power shortage crisis. drought in southwest China extended to the province.

Yunnan Aluminum, the region’s largest aluminum maker, announced on September 13 that it was asked to reduce its electricity consumption by 10 percent and shut down some electrolytic baths. The Shenzhen-listed company’s current annual electrolytic aluminum production capacity is about 3.05 million tons, according to data released by its management last month.

Henan Shenhuo Coal and Power, another Shenzhen-listed aluminum maker, said the next day it would gradually suspend aluminum manufacturing operations at its Yunnan-based unit to reduce electricity consumption.

Besides the local unit of Yunnan Aluminum and Henan Shenhuo Coal and Power, the two units of Hong Kong-listed Chinese group Hong Qiao are also major players in the electrolytic aluminum sector in the province, but so far , China Hong Qiao is all about any possible disruption to its production schedule.

The power shortage in the province stems from the heatwave that hit China’s southwestern provinces this summer, which caused severe drought in a region that relies heavily on hydroelectricity for its power consumption. energy, aluminum manufacturing companies in neighboring Sichuan province and the city of Chongqing had already announced their respective production cut plans last month.

Yunnan province’s total electrolytic aluminum capacity is 5.6 million tons, with about 5.2 million tons capacity in service at the beginning of the month, accounting for 12.8 percent of the country’s total, according to statistics from Chinese metals information provider Shanghai Metals Market Information & Technology.

Many aluminum makers in Yunnan have recently cut production by around 10%, but power supply is still limited, some industry insiders believe a 20-30% production cut is a possibility distinct, according to a report on the industry’s website. shanghai metal market.

The power shortage will likely lead to a nearly 20% drop in electrolytic aluminum production in Yunnan, GF Futures predicted in a research report, adding to the fact that there are about 1 million tons of capacity. in Sichuan was halted late last month, and will take at least two months to recover, China’s aluminum output in the second half is expected to drop significantly.

With the changing supply landscape, the most active electrolytic aluminum futuress on the Shanghai Futures Exchange has gained about 12% since mid-July after the contract price concluded its four-month decline.

Editors: Tang Shihua, Futura Costaglione