Reuters reported that the power operator in Henan Povince's industrial city of Gongyi stopped providing daytime electricity to aluminium fabricators forcing them to halve their production.
Industry sources said that falling production at Gongyi's fabricating plants was cutting their consumption of primary aluminium, causing higher stocks of the metal at the fabricators and at aluminium smelters in Henan which sell the bulk of their metal production locally.
A sales manager at a fabricating plant in Gongyi said that our plant can only work 10 PM to 8 AM. He said that the plant was buying less spot aluminium this week. Fabricating plants are using less aluminium. Smelters' sales certainly are falling sharply.
An official at a large aluminium smelter in Henan said that fabricators in Gongyi are holding record stocks of aluminium following lower production.
Industry sources said that Gongyi produced about 100,000 tonnes of semi finished aluminium products such as plates, strips and foils a month and used about 1 million tonnes of primary aluminium a year.
The State Grid Corporation of China said that regions like Henan in central and southwest China face reduced electricity supplies after demand jumped because of freezing weather in January that led to coal shortfalls.
The sales manager said that the local government was trying to maintain power supply to energy intensive aluminium smelters in Gongyi, home of aluminium producer Zhongfu, because the cost of production stoppages and restarts was high for smelters.
A Zhongfu source said that power shortages had forced its subsidiary to delay the start up of a new facility with annual smelting capacity of around 130,000 tonnes. Including that capacity, Zhongfu had 850,000 tonnes of aluminium smelting capacity a year.
