SHANGHAI Aug.15 (CBI China) -- Shandong Xinfa Aluminum and Electricity Group may be forced to shut aluminum cells due to tightening supply of coal for power generation. Xinfa is the fourth largest aluminum producer in China, with annual aluminum capacity at 560 kt, and operates its own power generation plant with annual power generation capacity of 8 billion KWH. 

    CBI believes there is a possibility Xinfa will cut production due to shortages of electric power, and other capacity in Shandong province will likely be affected by tightening power supply as well. Soaring prices of coal for power generation are behind power shortages in Shandong, with power suppliers reducing output  due to losses. For aluminum smelters with integrated power plants, the high price of coal needed for refined aluminum production has been cutting into profits. According to CBI data, the total refined aluminum capacity in Shandong province is 2.534 million mt, but only 4.6% of capacity is from facilities without their own power plants. Among those smelters without power plants, shortages caused less than 30% to cut production, so CBI believes tightening power supply in Shandong will have limited impact on supply.