BEIJING (Commodity Online): Power shortages have forced aluminum producers in the Guangxi district of China to start cutting production in September, causing a 120,000 tonnes production loss in the region.
-The action will cause a decline of 4% of China’s total production capacity and will trip the supply-demand equation from surplus to near equilibrium.
"The cut will also coincide with the start of the peak consumption season in China, thus lending support to prices then. We are also watching the situation to see if it widens to include other Aluminium producing provinces in the region. There are signs that Guizhou may be next”, said Zhang Xin, a metals analyst, Reuters reported.
"If aluminium prices rise high enough during the dry season to offset higher Electricity costs then, smelters may ramp up production before that. But we think that they are likelier to resume full production only next year" he added.
Smelters will possibly start full production only by May 2012 when the rainfall season will result in a higher hydro electricity generation and lower energy costs.
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