Metals News
China Al Costs Could Rise $60/T with New Power Tariffs, Sources Say
industry news
Dec 7,2009

SHANGHAI, Nov. 23 -- China's new electricity tariffs will add around USD 60/mt to aluminum production costs, estimated market sources.

    "To produce one ton of aluminum requires 14,000-15,000 kilowatt hours, which means after the increase, the cost will go up by RMB 392-420/mt (USD 57-61/mt)," said an analyst in Shanghai.

    Average electricity prices for non-residential use have been increased by RMB 0.028/kWh, effective immediately, according to the National Development and Reform Commission (NDRC).

    The new pricing policy also charges more for greater volumes supplied.

    A spike in power costs will hit all base metals, but will particularly affect aluminum as a major power consumer.

    "It will also mean a slight increase in zinc [production] costs of about RMB 90/mt, as producing one ton of zinc requires 3,000-4,000 kilowatt hours," said the analyst.

    "Base metals are quite bullish these days, I am convinced the prices will go up further after China's new electricity pricing system," he said.

    Spot zinc traded on the Shanghai Changjiang Nonferrous Metals Market on Friday was quoted at RMB 17,300-17,800/mt, up RMB 275/mt from Thursday while spot aluminum gained RMB 60/mt to RMB 15,050-15,100/mt.

    (Source: Metal Bulletin)

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