SMM Forecast for How Aluminium Supply in China Will Evolve in 2023 amid Constant Production Disruptions

SHANGHAI, Feb 20 (SMM) - Beginning in early February, there had been widespread rumours that aluminium smelters in Yunnan would be subject to capacity cuts due to tightening power supply in the dry season. SMM learned that local smelters began to reduce their production over this past weekend, with 1 million kilowatts of power load to be cut within 10 days.

The first round of power rationing reduced the operating capacity in Yunnan to around 4.04 million mt in September 2022, which had held at this level ever since. After the second round of power rationing, the operating capacity in the province is estimated to drop to 3.4 million mt at the end of February.

Future changes in domestic aluminium output will mainly depend on the following regions:

1. Yunnan

Under optimistic scenario, capacity in Yunnan will gradually resume after the rainy season arrives in May-June, and the operating production capacity is estimated to recover to about 4 million mt in July.

2. Sichuan

 The installed aluminium production capacity in Sichuan is 1.2 million mt, and the operating capacity is about 1 million mt in normal periods. After all production was shut down in August 2022, production started to resume in the fourth quarter of 2022. Now that the power shortage has gradually eased along with an increase in rainfall, the operating capacity has the potential to recover to 800,000 mt in March.

3. Guizhou

In March, the operating capacity in Guizhou is expected to recover to about 900,000 mt.

4. In terms of new projects, Gansu and Inner Mongolia will be the major contributors.

In March, it is expected that Gansu Zhongrui’s new project will be able to operate at full capacity, while Inner Mongolia Baiyinhua’s project is expected to run at about 200,000 mt.