Southwest China's power supply is tight

According to the Central Meteorological Observatory, from August 17 to 26, there will still be persistent high temperature weather in Sichuan Basin, Jianghan, Jianghuai, Jiangnan and other places, and the local temperature can exceed 40 °C. The National Climate Center said that the overall intensity of such a regional high temperature event is the strongest since complete meteorological observation records began in 1961. High temperatures have led to a rapid increase in electricity demand, while drought has caused a sharp drop in hydropower supply. Sichuan and Chongqing, which are located in the upper reaches of the Yangtze River, have begun to cut power; Hefei, Nanjing, Wuhan and other places in the middle and lower reaches of the Yangtze River have also proposed staggered power consumption.

Aladdin (ALD) researched and learned that among the 1 million tons produced by five electrolytic aluminum enterprises in Sichuan, 200,000 tons were shut down due to accidents. Other aluminium profile manufacturers in china reduced production by 30-80% due to power cuts. More than half, and there is the possibility of further expansion of production cuts.

In the adjacent Chongqing area, an electrolytic aluminum plant began to shut down due to power shortage. The aluminum plant first stopped 20 420KA electrolytic cells; another aluminum plant in the area stopped 10 300KA electrolytic cells in early August. It is estimated that due to power factors There is a high possibility of continuing to stop.

According to the statistics of Aladdin (ALD) as of August 19, the total reduction of electrolytic aluminum production capacity in Sichuan and Chongqing has exceeded 500,000 tons.

Following the southwest region, Henan has become the first region in the northern region where electricity restrictions have led to a reduction in electrolytic aluminum production. Relevant news shows that the current power load gap in Henan Province is estimated to be about 6 million, of which Yidian Group (not a single aluminum plant) notified to reduce 500,000 loads, of which 300,000 loads were added. It is estimated that the output of the aluminum plant will affect less than 100 tons. Another aluminum plant in Luoyang reduced its load for 3 hours, and Jiaozuo Aluminum Plant was also notified, but it has not had a significant impact on production.

It is also dominated by hydropower. When many aluminum companies in Sichuan and Chongqing have cut production and stopped production due to the shortage of power supply, the market has begun to worry about the situation of Yunnan, the largest province of electrolytic aluminum in the future.

Combined with the weather forecast of the Bureau of Meteorology, the high temperature and power shortage in some areas may continue until September, and the impact on the electrolytic aluminum supply side may continue to expand. Aladdin (ALD) recently investigated and learned that Yunnan, Guangxi and Guizhou also have shortages of power supply. Please pay attention to whether there will be production cuts in the later period.

Europe's power shortage

The power crunch in Europe is taking a growing toll on the region's industrial metals sector, with two more smelters this week announcing plans to cease operations. Nyrstar to carry out care and maintenance of its Budel zinc smelter in the Netherlands from early September until further notice

Norsk Hydro will fully shut down its Slovalco aluminium smelter in Slovakia by the end of the same month. Slovalco is the fourth European smelter to close in the past 12 months. Alcoa's San Ciprian smelter in Spain has been shut down for two years, as have primary smelters in the Netherlands and Montenegro.

Since the power crisis in Europe shows no signs of abating, and it may indeed get worse before winter, it is not ruled out that more capacity will join the production reduction team in the later stage.

In addition to power-hungry aluminum, other metal species, such as zinc smelting, have also cut production.

Whether it is China, Europe or other regions, the power shortage points to the same source - energy supply, but the power supply shortage in Europe is caused by the shortage of natural gas and other resources caused by the conflict between Russia and Ukraine, while the power shortage in China It is the lack of water energy due to extreme climate. This seems to form another paradox. The global warming aggravated by the burning of fossil fuels (power generation) and the extreme weather brought about by it have affected the development of hydropower (green power) and increased the decarbonization problem of the entire industry. Green water It is particularly sensitive to changes in weather patterns and affects the development of some industries. If coal-fired power with guaranteed capacity is still used, decarbonization is just a piece of paper. In related news, the Indian government is looking into slowing the decommissioning of aging coal-fired power plants, while also adding new sites to expand the current coal capacity of about 204 gigawatts to 250 gigawatts over the next decade above. The 4,800-megawatt Kusile power plant in South Africa was completed last month and is expected to burn up to 15 million tonnes of coal a year until it closes in 2073.

Therefore, what really worries the market may not be the power shortage at this time, but in the future, when clean energy, such as water, wind, natural gas, nuclear energy, etc. is limited by various factors, many countries around the world need to burn more coal to cope with high Serious shortages of demand and clean energy, geographical conflicts in different countries and regions, trade conflicts, extreme climate changes, serious imbalances in development, etc., have turned electricity and politics, electricity and climate, into a vicious circle.

Has electricity become a problem affecting the supply of aluminium metal? Since electricity is the biggest factor affecting the cost of electrolytic aluminum, its importance is self-evident. In recent years, as my country's electrolytic aluminum production capacity has been transferred to areas rich in hydropower resources in Southwest China, this has also brought certain challenges to local power supply. In Yunnan in 2021, the contradiction between supply and demand will be more prominent. In addition, hydropower resources are seasonal and unstable, and "see the sky to eat", so the challenge is even more obvious.