14 APRIL 2015Shanghai Metal Market
Power tariff cuts to slow retirement of China high-cost aluminum capacity
Edited by : AL CIRCLE
1 min read
China’s State Council decided last week to cut power rates for industrial and commercial users by an average 0.018 yuan ($0.00294)/Kwh.
Some 70% of China’s operational aluminum capacity relies on captive power plants and are thus unaffected by these tariff adjustments, SMM understands. Smelters that source power directly from power plants will similarly be unable to benefit from these tariff cuts. It remains to be seen whether those that have already been receiving preferential power rates will qualify for the tariff cuts.
Aluminum smelters that do qualify for the tariff cuts are already suffering from high production costs, with 20% of China’s operational aluminum capacity suffering losses in cash costs at current prices, SMM data showed. Therefore, this cut in power tariffs will slow the retirement of loss-making, outdated capacity.
Some 70% of China’s operational aluminum capacity relies on captive power plants and are thus unaffected by these tariff adjustments, SMM understands. Smelters that source power directly from power plants will similarly be unable to benefit from these tariff cuts. It remains to be seen whether those that have already been receiving preferential power rates will qualify for the tariff cuts.
Aluminum smelters that do qualify for the tariff cuts are already suffering from high production costs, with 20% of China’s operational aluminum capacity suffering losses in cash costs at current prices, SMM data showed. Therefore, this cut in power tariffs will slow the retirement of loss-making, outdated capacity.
Unlock full access – sign up for FREE.
Key benefits
Find exclusive data-driven insights and in-depth analysis
Get our daily newsletter delivered straight to your inbox
Access real-time and historical price trends from global indices
Post and respond to latest business leads
Stay ahead with alerts on learning tools
...and so much more!SIGN UP / LOGIN
Previous article
Bank of America Merrill Lynch cuts 2015 price forecast for Aluminium to $1,800 a ton
Next articleEGA to showcase industry leadership at ALUMINIUM Middle East 2015
Grow with
AL Circle
