SHANGHAI, Jan. 21 (SMM) -- Most aluminum producers in Henan province experienced electric power shortages over the past week, but Securities Times reported that the power shortages have been eased at those producers with emergency measures.
CHALCO Henan Branch, Jiaozuo Wanfang Aluminum Manufacturing Company, Henan Zhongfu Industry Company (Zhongfu Industry), and other companies are located in Henan province, a major aluminum producing region. Sources report that many small metal enterprises including lead smelters have been forced to cut or suspend production due to insufficient electricity supply, with a decline of 20% in lead output reported at Anyang Yubei Gold & Lead Group during January 2010.
Zhongfu Industry is a large aluminum producer in Gongyi city, Henan province. The power supply department in Gongyi city has stopped supplying electricity to aluminum smelters during the daytime, forcing many local aluminum producers to cut production. Yao Guoliang, Secretary of the Board of Directors of Zhongfu Industry, said aluminum smelters were affected negatively by power shortages over the past week, since the shortages of coal used for power generation tightened electric power supply in Gongyi city due to the sub-zero weather in Henan province. However, Zhongfu Industry has the power plant of its own, limited any negative impact from power shortages on the company.
Sources report that supply of coal used for power generation experienced serious shortages due to safety inspection in local coal mines and resources integration in major coal production provinces. Meanwhile, recent heavy snowfalls and sub-zero weather hampered the transportation of coal used for power generation. In this context, Henan provincial government thus took ten measures in an attempt to ease the power shortages. “Power supply department has resumed electricity supply along with recovering weather conditions from yesterday, greatly easing power shortages at the company,” Yao said.
In addition to aluminum producers in Gongyi city, aluminum producers in Sanmenxia and Jiaozuo cities also reported supply shortages of electric power due to sub-zero weather. Sources report that the electric power department has limited the electricity use at Jiaozuo Wanfang Aluminum Manufacturing Company, with its electricity prices reported up RMB 0.037/kWh, and its electric power costs have risen to RMB 0.43/kWh currently as a result.
A researcher who has just returned from Jiaozuo Wanfang Aluminum Manufacturing Company after carrying out a survey said the negative impact from power shortages was greater than expected, with most aluminum producers in Henan province facing pressure of production cuts. However, any negative impact on Jiaozuo Wanfang Aluminum Manufacturing Company from power shortages was limited. Xiao Zheng, a researcher from Guangfa Securities Company, has contacted with some aluminum producers recently and said the power rationing will still exert negative impact on aluminum production at large aluminum producers in Henan province to some extent in the short term despite that they can generally maintain production currently.
SMM believes the fourth cold wave has occurred in north and central China, and although any negative impact on aluminum production from power shortages is limited currently, the power rationing will exert great negative impact on the lifetime of aluminum electrolytic cells. In this context, there will be high possibility that aluminum producers will conduct unit maintenance frequently despite of limited pressure of production cuts, and any impact on aluminum output from large-scale unit maintenance at aluminum producers will be great. In general, SMM predicts the impact on domestic aluminum production from the sub-zero weather will intensify.
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