• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

China’s metal consumers to feel supply sting from forced power cuts

September 29, 2021 by David Barret Leave a Comment

September 29, 2021

By Tom Daly and Min Zhang

(Reuters) – Metal consumers in China, from appliance makers to auto, construction and solar panel firms, are readying themselves to face potential supply shocks after power curbs and shortages forced several smelters to cut production in recent weeks.

Output curbs tied to emissions caps over the winter are nothing new to China’s steel and aluminum makers. This year, though, power constraints dragged on through summer because of low coal supplies and strong demand, leading to forced shutdowns of energy-intensive operations and worries about sufficient heating as cooler weather approaches.

Power-hungry sectors like aluminium and cement were also always likely to be first in line when Chinese regions were told to redouble their efforts earlier this year to meet lower energy consumption and intensity targets.

China power rationing map https://ift.tt/3F1bWu7

Fertiliser producers, also notorious energy hogs, have been affected by power cuts and surging costs as well, but because of their importance to food security they have been allowed to maintain high operating rates and assured of power supplies.

NO REPRIEVE

Many metal makers, however, have been ordered to reduce operations to conserve power, resulting in lost output of key industrial materials.

Much of China’s metal production is concentrated in regions with severe power restrictions in place, including Jiangsu, Hebei, Xinjiang and Yunnan, as soaring electricity demand outstrips supply and forces the government to take drastic action to try and contain the fallout.

China’s top producers of key industrial products & commodities https://ift.tt/2Y2fxrl

Investment bank Morgan Stanley estimates 7% of aluminium capacity in China has so far been impacted by power curbs, while roughly 67% of China’s total steel capacity across 11 provinces have announced some output controls for the second half of 2021.

For cement, 35% of China’s total production has been impacted, and around 30%-40% of major petrochemical production capacity, it said.

China will churn out roughly 1.5 million tonnes of aluminium less than planned this year, which means lost metal sales of $4.5 billion, said BMO Capital Markets analyst Colin Hamilton, adding that the figure for steel is likely much higher.

Some of the biggest commodity price spikes this year have been in steelmaking materials such as ferrosilicon and silicomanganese, which have shot up 87% and 58% this quarter alone, respectively, as power curbs forced output cuts.

China’s coal and metal prices surge amid power crunch, forced output curtailments https://fingfx.thomsonreuters.com/gfx/ce/akvezqrowpr/ChinaCoalMetalPrices.png

“Power controls are the talk of the marketplace,” said Clare Hanna, senior steel analyst at CRU, who estimates China’s silicomanganese production plunged 40% in July from the previous month as curbs that began in Inner Mongolia spread to Guangxi and elsewhere.

    “We are anticipating that power supply is going to be quite tight through the winter,” Hanna said.

Power curbs on aluminium also began in Inner Mongolia before spreading to Yunnan in China’s southwest. Over the past three years, aluminium smelters have moved capacity to the province, which is also a major tin and zinc hub, to tap its usually abundant hydropower resources, but severe drought in May and June this year strained the grid.

China seasonal metals output https://ift.tt/3ukErxO

Chinese aluminium companies had been looking to tap into the trend towards low-carbon aluminium, said Paul Adkins, managing director of consultancy AZ China.

But “there’s simply not enough renewable energy to support any more than 20% of the total need,” he said.

COSTLY CUTS

Smelters also face a costly dash to secure enough coal for their captive power plants, with Chinese thermal coal futures near record highs above 1,300 yuan ($200) a tonne.

China thermal coal prices https://ift.tt/3maXhns

Dozens of manufacturers ranging from dye makers to soybean crushing plants have also had to curtail or stop operations at least through the end of the upcoming National Day holiday from Oct. 1, although some market watchers expect the curbs to last longer.

“China’s power shortages are a reflection of the global strain in energy markets and won’t be resolved overnight,” Capital Economics said in a note to clients on Wednesday.

“Power rationing will constrain industrial activity until demand weakens enough to bring the domestic electricity market back into equilibrium.”

Extended metal supply outages pose a risk to an array of end users, who are already facing rising prices.

“A key concern for the auto supply chain is the cost-push inflation and tightening upstream supply that could affect downstream production/profits,” said Morgan Stanley.

China seasonal output of industrial goods https://ift.tt/3ARJIzj

($1 = 6.4662 yuan)

(Reporting by Tom Daly, Shivani Singh, Min Zhang and Mai Nguyen; Editing by Gavin Maguire and Tom Hogue)

Source Link China’s metal consumers to feel supply sting from forced power cuts

David Barret
David Barret

Related posts:

  1. Evacuated Afghans, hoping to resettle in U.S., face extended limbo in third countries
  2. Daily Crunch: Fintech startup Jeeves snags $500M valuation after $57M Series B
  3. Tyk raises $35M for its open-source, open-ended approach to enterprise API management
  4. Malaysia says auditor KPMG to pay $80 million in 1MDB settlement

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • A “Good Death”: How Do Doctors Want To Die?
  • People Are Throwing Baby Puffins Off Cliffs In Iceland Again – But Why?
  • Yet Another Ancient Human Skull Turns Out To Be Denisovan
  • Gen Z Might Not Be On Course For A Midlife Crisis – Good News, Right? Wrong
  • Glowing Plants, Punk Ankylosaur, And Has The Wow! Signal Been Solved?
  • Pulsar Fleeing A Supernova Spotted Where Neither Of Them Should Be
  • 20 Years After Hurricane Katrina: Is It Time For A New Approach To Hurricane Classification?
  • Dog Named Scribble Replicates Quantum Factorization Records – So We Tried It Too
  • How Old Is The Solar System? (And How Can We Tell?)
  • Next Week, A Record-Breaking Over 7 Billion People Will See The Total Lunar Eclipse
  • The Goblin Shark Has The Fastest Jaws In The Ocean, Firing Like A Slingshot At Speeds Of 3.1-Meters-Per-Second
  • We Thought Geological Boundaries Were Random. Now, A New Study Has Identified Hidden Patterns
  • Do Fish Sleep?
  • The Biblical Flood Myth That Inspired Noah’s Ark Had A Sinister Twist
  • Massive Review Of 19 Autism Therapies Finds No Strong Evidence And Lack Of Safety Data
  • Giant City-Swallowing Cracks In Earth’s Surface Are A “New Geo-Hydrological Hazard”
  • Three Incredible Telescopes Looked At The Butterfly Nebula To Learn Where Earth Came From
  • The Pacific Ocean Is So Vast It Contains Its Own Antipodes
  • World’s Tallest Bridge Over “Crack In The Earth” Gets Daunting Load Test By Fleet Of 96 Trucks
  • Mars’s Interior Still Has Evidence Of Ancient Impact, Dead NASA Mission Tells Us
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version