Electricity shortage does not necessarily hoist aluminium price

Lately, aluminium price has been bounding up, the direct reason of which is electricity shortage in China. The market is greatly concerned about supply of electrical coal and electricity transition through electric fences. On July 10th, 20 major electrolyse aluminium producer agreed to cut their output to 5%¡ª10 pct in order to raise the price of electrolyse aluminium and cut down consumption of resources. The market predicts that the electricity shortage will push aluminium price to its peak, but some observers say aluminium price in Shanghai does not necessarily be pushed to a new high.

First, aluminium producers may not cut their output. Though these smelters signed the agreement, they cannot be forced to realized as the agreement is voluntary.

Second, output cut will be in a small scale if it really takes place. If the cut starts at August till December, then it will reduce output of 227000¡ª454500T only, while this already happened once when the country was suffering from snowstorm this year.

Then, aluminium supply is only slightly affected by electricity shortage in Shanxi. Electrolyse aluminum enterprises affected by electricity shortage in Shanxi accounts for 800000T/Y production capability in total, 10 pct (equal to 80000T/Y electrolyse aluminium) of which was closed. This amount is sure not to exert large impact on aluminium supply.

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