China Aluminum Producers Expected to Benefit Most from Direct Power Supply Program

BEIJING, July 3 -- China's electrolytic aluminum enterprises are likely to benefit most from the national pilot program that allows some large companies to buy electricity directly from power plants, analysts say.

    Since electrolytic aluminum enterprises consume electricity heavily in their production process, the program will unquestionably favor them, an analyst noted.

    The cost of electricity accounts for nearly 50 percent of the total in producing electrolytic aluminum when considering the current aluminum and electricity prices, the analyst added.

    China's State Electricity Regulatory Commission (SERC) announced Tuesday that electricity users with voltage of 110 kilovolts and above are now permitted to purchase electricity directly from thermal power enterprises with unit capacity of at least 300,000 kilowatts, or from hydropower plants with unit capacity of at least 100,000 kilowatts.

    SERC also said that under the pilot program, electricity prices may fall 10-20 percent from their current average level.

    Analysts point out that the power consumption voltage of large aluminum producers is typically at 110 kilovolts or above. Thus, large aluminum producers will benefit most from the program.

    Earlier in March, SERC revealed that 15 domestic electrolytic aluminum companies have been selected to participate in the direct power supply program.

    According to analysts, the pilot program may help aluminum producers slash costs, but it's also likely to trigger more enterprises to restart their previously shut down plants, which may exert oversupply pressure on the aluminum market.

    Some analysts hold that it's still too early for aluminum enterprises to cheer because the concrete measures for the program haven't yet been revealed.

    (Source: chinamining.org)