Guizhou Power Grid Imposes a Third Round of Power Rationing on Local Aluminium Smelters

SHANGHAI, Jan 5 (SMM) - On January 5, Guizhou Power Grid issued a new notice, stating that due to the sharp drop in temperature and the steep increase in heating demand, the power load across the province continued to run at a high level. The power shortage has extended in spite of the previous two rounds of power load reduction on aluminium smelters, and the hydropower is still on a rapid downward path. In order to secure power supply to meet the peak demand in winter, a third round of power rationing is implemented targeting the aluminium smelters, who are required to be closed or operate at low capacity.

Five aluminium producers, namely Guizhou Huaren New Material Co., Ltd., Zunyi Aluminium Co., Ltd., Guizhou Liupanshui Shuangyuan Aluminum Industry Co., Ltd., Guizhou Xingren Denggao New Material Co., Ltd. and Anshun Aluminium Co., Ltd., are required to cut their power consumption by 500,000 kilowatts together within five days, starting from January 5.

This is the third notice on power load cuts issued by Guizhou Power Grid recently. As early as December 13, Guizhou Power Grid issued the first notice to impose a combined power load cut of 700,000 kilowatts on five aluminium smelters, which lasted five days. The second notice on power rationing was released on December 28. Five aluminium smelters were required to be closed to save a total power load of 300,000 kilowatts within three days, starting at 0:00 December 29.

The previous two rounds of power rationing saved a total power supply of 1 million kilowatts, which could be converted to an annualised production capacity of 640,000 mt of aluminium.

According to the requirements of the third round of power rationing, aluminium smelters in Guizhou may need to further reduce their production by about 300,000 mt. Altogether, about 940,000 mt of aluminium output was affected during the three rounds of power rationing. 

SMM data shows that at the end of November, 2022, the operating aluminium capacity in Guizhou province was about 1.35 million mt. Some of the capacity stemmed from the release of new capacity of Xingren Denggao that has been ramping up to date. However, the tight power supply in December exerted great pressure on the production of new capacity, thus the commissioning of following new capacity might be delayed. In addition, Guizhou Yuanhao's new aluminium project with a capacity of about 86,000 mt, another new project commissioned in Guizhou province, was also affected by the power rationing and the production has progressed slowly. The current power rationing in Guizhou will have negative impacts on the aluminium output as the production restriction is unlikely to ease even after the smelters seek to negotiate with the Power Grid. It is expected that production suspension of designated smelters will complete in early January.