Argus Media Limited

09/16/2021 | News release | Distributed by Public on 09/16/2021 07:04

China's Yunnan Aluminium cuts output on energy curbs

China's key aluminium producer Yunnan Aluminium has reduced its output by around 770,000t since May because of electricity supply shortages after the government imposed an energy consumption control policy.

The Yunnan provincial government has instructed aluminium producers to keep their monthly output during September-December below actual production in August. Combined production of major smelters, including Yunnan Aluminium, Yunnan Shenhuo Aluminium, Yunnan Hongtai New Materials and Yunnan Qiya Metal, is expected to fall to 3.21mn t this year compared with their total capacity of 4.48mn t/yr. Only 2.75mn t/yr of capacity at these smelters is currently in operation.

Yunnan Aluminum's actual output during September-December will be much lower than the production guidance it set out at the beginning of this year, expecting its 2021 production to fall to around 2.36mn t owing to the energy consumption control policy. It produced 2.4063mn t of aluminium in 2020, up by 27pc from a year earlier.

The firm's subsidiary Haixin Aluminium has failed to put the second phase of a production line with 380,000 t/yr capacity into production as scheduled because of the energy curbs. The company will try to offset the impact of the power rationing by carrying out equipment maintenance, optimising the production process and rationally scheduling output, it said.

Spot prices for A00 grade aluminium in east China have fallen back to 22,700 yuan/t ($3,526/t) today, after rising to around Yn23,400/t early this week on output disruptions in main production hubs including Yunnan, market participants said.

China's energy consumption curbs, which are aimed meeting the country's carbon emission reduction targets, have bolstered prices for some other nonferrous metals and alloys, with silicon metal prices surging to a 15-year high and magnesium metal rising to a 13-year high. Prices for calcium-silicon alloy increased to their highest since this assessment was launched in September 2012.