HONG KONG, Jan. 15 -- The power operator in Henan province's industrial city of Gongyi stopped providing daytime electricity to aluminium fabricators as of Monday, forcing them to halve their production, industry sources said on Friday.
Falling production at Gongyi's fabricating plants was cutting their consumption of primary aluminium, causing higher stocks of the metal at the fabricators and at aluminium smelters in Henan, which sell the bulk of their metal production locally.
"Our plant can only work 10 pm to 8 am," a sales manager at a fabricating plant in Gongyi told Reuters, adding the power operator did not say when daytime power supply would resume but said it was not likely to happen month.
He said the plant was buying less spot aluminium this week. "Fabricating plants are using less aluminium. Smelters' sales certainly are falling sharply," he added.
"Fabricators in Gongyi are holding record stocks of aluminium following lower production," an official at a large aluminium smelter in Henan said.
Industry sources said Gongyi produced about 100,000 tonnes of semi-finished aluminium products such as plates, strips and foils a month and used about 1 million tonnes of primary aluminium a year.
Regions like Henan in central and southwest China face reduced electricity supplies after demand jumped because of freezing weather in January that led to coal shortfalls, the State Grid Corp of China (SGCC) said last week.
The sales manager said the local government was trying to maintain power supply to energy-intensive aluminium smelters in Gongyi, home of aluminium producer Zhongfu (600595.SS: Quote), because the cost of production stoppages and restarts was high for smelters.
A Zhongfu source said power shortages had forced its subsidiary to delay the startup of a new facility with annual smelting capacity of around 130,000 tonnes. Including that capacity, Zhongfu had 850,000 tonnes of aluminium smelting capacity a year.
Aluminium smelters in Henan province, which account for a fifth of capacity in the world's top producer of the metal, received calls from local power operators that their power supply may face cuts.