Insight
China’s aluminium smelting power constraints are here to stay
Report summary
On 26 August, the National Development and Reform Commission (NDRC) issued the “Notice on Improving Tiered Power Tariffs for the Aluminium Industry”. It pledges to prohibit preferential power tariffs and introduces a new set of rules for tiered power tariffs. What does it means for aluminium smelters and why this time the implementation of these policies is going to be more impactful than in previous attempts?
Table of contents
- New plan, new rules, and new scarcity
- The extent of power related cutbacks
- The central government wants to eliminate preferential power tariffs
- but local governments are reluctant
- A margin squeeze at power plants may be the catalyst for the removal of preferential power tariffs this time around
- The removal of preferential power tariffs unlikely to compromise smelters' viability at current ShFE prices
- Tougher rules on tiered power tariffs will put an extra burden on a large number of smelters, especially beyond 2025
- What next
Tables and charts
This report includes 3 images and tables including:
- Capacity cuts at Chinese aluminium smelters as of August, ktpa
- Base case cash costs before and after removing preferential power tariffs
- Major policy changes on tiered power tariffs
What's included
This report contains:
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