China’s Power Rate Cuts Pose Downside Pressure on Aluminium Prices-Shanghai Metals Market

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China’s Power Rate Cuts Pose Downside Pressure on Aluminium Prices

SMM Insight 02:53:45PM Oct 15, 2013 Source:SMM

SHANGHAI, Oct. 15 (SMM) – China’s power rate cuts from this month pose further downside pressure on aluminium prices, Shanghai Metals Market foresees.

China’s National Development and Reform Commission (NDRC) cut on-grid power tariffs – prices paid to power producers by the State Grid Corp. of China, effective from this month.

For instance, on-grid power tariffs at power plants run by Jiangxi Ganneng Co. were cut by 0.01 yuan/kwh to 0.4752 yuan/kwh from Wednesday, October 9.

As electricity prices which industrial consumers are charged remain unchanged, aluminium smelters using electricity from the state grid remains unchanged too.

However, a growing number of aluminium smelters in China have built self-run power plants.

Power plants are expected to argue for lower coal prices given a supply surplus of steam coal and cuts in on-grid power tariffs.

Lower coal prices would help reduce production costs at those aluminium smelters, which would translate into lower aluminium prices given the current oversupply in the market, according to SMM’s research team.
 

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Aluminum Ingot
May.23
14160.0
-60.0
(-0.42%)
Aluminum Ingot - Fo Shan
May.23
14250.0
-60.0
(-0.42%)
Aluminum Ingot - Wu Xi
May.23
14155.0
-50.0
(-0.35%)
Aluminum Ingot - Hang Zhou
May.23
14190.0
-30.0
(-0.21%)
Aluminum Ingot - Chong Qing
May.23
14190.0
-50.0
(-0.35%)

China’s Power Rate Cuts Pose Downside Pressure on Aluminium Prices

SMM Insight 02:53:45PM Oct 15, 2013 Source:SMM

SHANGHAI, Oct. 15 (SMM) – China’s power rate cuts from this month pose further downside pressure on aluminium prices, Shanghai Metals Market foresees.

China’s National Development and Reform Commission (NDRC) cut on-grid power tariffs – prices paid to power producers by the State Grid Corp. of China, effective from this month.

For instance, on-grid power tariffs at power plants run by Jiangxi Ganneng Co. were cut by 0.01 yuan/kwh to 0.4752 yuan/kwh from Wednesday, October 9.

As electricity prices which industrial consumers are charged remain unchanged, aluminium smelters using electricity from the state grid remains unchanged too.

However, a growing number of aluminium smelters in China have built self-run power plants.

Power plants are expected to argue for lower coal prices given a supply surplus of steam coal and cuts in on-grid power tariffs.

Lower coal prices would help reduce production costs at those aluminium smelters, which would translate into lower aluminium prices given the current oversupply in the market, according to SMM’s research team.