China’s Guizhou aluminium producers fear losses due to power price hike

Power prices for the aluminium producers in China's Guizhou province will be raised by 0.07-0.08 yuan per kilo watt hour (kwh) from April this year, reported industry sources. The decision is seen by the industry watchers as a logical one since coal has become costlier over the past six months.

Power prices, after the hike, will increase to 0.36 yuan /kwh for Guizhou aluminium producers.

Shanghai Metals Market estimates the hike will take power costs at the at Guizhou aluminium smelters to 900-1,200 yuan per tonne leading to escalating losses at current aluminium prices.

At present, the total aluminium capacity in Guizhou stands at 940,000 tonnes, which accounts for approximately 2.16 per cent of China's total aluminium output of 43.50 million tonnes in 2016. Since 80 per cent of the domestic aluminium producers have their own captive power plants, the impact of the price hike on the overall aluminium industry will not be that big, SMM opines.

However, the smaller producers are going to be at the receiving end of this price hike move. One company said that they are under negotiation with the local government over settlement of the final power price for them.

{googleAdsense}

“Power price in Guizhou is closely linked to coal price, and the recent surge in coal market is the main reason behind the planned hike,” said the aluminium producer.

The company’s current operational capacities are 280,000 tonnes. In February 2017, it produced 23,000 tonnes aluminium. It expects to hold stable with its March output as well but is not maintaining an aluminium inventory.