Aluminium to gain as China curtails production on power crisis

Last Updated : 02 September 2011 at 18:05 IST

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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Bank Of America Capital Scramble Continues With Alleged Closure Of China Construction Bank Stake Sale

We are not sure how this is news, since it was announced weeks ago, but according to CNBC the bank that did not need capital, is following up yesterday's $5 billion capital raise with another $10 or so billion by selling "at least half of its 10% stake in CCB." That said, back on August 11, the FT came out with a report titled, "BofA faces struggle to sell CCB stake" in which we learn that "Bank of America is facing difficulties in selling its 10 per cent stake in China Construction Bank, partly because potential investors are expecting a deluge of rights issues, share sales and new listings from Chinese banks. But it might now raise less than than it had hoped. The BofA stake, once valued at $20bn, is now believed to be worth several billion dollars less, according to bankers. The US bank has approached sovereign wealth funds and other investors in the Middle East and in Asia, according to people familiar with the matter. The Kuwait Investment Authority was one potential buyer BofA approached, these people add, but the sovereign wealth fund already holds large stakes in ICBC and Agricultural Bank of China. “Right now, the KIA does not want to do anything more,” says one person with knowledge of the matter. “They think they have enough exposure to Chinese banks.” The KIA expects the two banks in which it already has shares to launch rights offers and the KIA intends to support those banks. "They will only look at CCB if the discount is high enough,” the person added...Potential buyers say the timing for BofA is particularly sensitive because, if CCB does launch a rights offer – as is widely expected – and BofA is still a main shareholder, it will be obliged to participate, using capital it can ill afford to part with." Stated otherwise, this must be one of those, "this time it's different" occasions. Next up: Bank of America does not, repeat NOT, need to sell its employee's blackberrys, but it will. Just because.

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