Power outage will not affect aluminum smelters in Shandong

Severe power shortages in Shandong in eastern China will have a limited impact on the province's aluminum smelting sector, which consumes the most power within the metals industry.

Shandong's current power shortage is equal to about one-third of its normal power demand. Power plants are facing financial difficulties in sourcing sufficient coal supplies because of high prices, as well as from low coal output in other coal producing regions.

High energy intensive industries, including aluminum smelting, in the province will be forced to operate at restricted capacities. The situation will vary in different cities, though the power shortage is expected to continue for the rest of the year.

Mr Li Yang an analyst with Beijing Antaike Information said that "It is unlikely that the power outage would suddenly halt all production by aluminum smelters in the province, and even if it did, the impact on China's aluminum sector would be small, as Shandong is not one of China's major aluminum production provinces."

Shandong's top three smelters are Chiping Xinfa Aluminum and Power Co Ltd, Nanshan Aluminum and Weiqiao Aluminum and Power Co Ltd, with production capacities of 560,000 tonnes, 320,000 tonnes and 600,000 tonnes per annum respectively.

Weiqiao Aluminum official, who asked remain anonymous said "We have our own power plant to support smelting operations located in Binzhou City where power shortages are less severe when compared with other regions in the province."

An official with Chiping Xinfa Aluminum said that "Small aluminum smelters without their own power source may be forced to cut production, but Chiping Xinfa Aluminum remains unaffected as it has its own power plants. The company is considering directing any extra power generated from its own plants towards civil use."

Industry analysts attribute the severe power shortages to high coal prices, rather than tight coal supplies, as smelters with their own power plants do not have much difficulty in sourcing coal, though have to fork out higher prices.

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