Yunnan Shenhuo to miss 2021 aluminium output targets on power curbs

China Hongqiao

30/07/2021 06:02

By Min Zhang and Mai Nguyen
    BEIJING, July 30 (Reuters) - A unit of China's aluminium
smelter Henan Shenhuo Coal & Power Co Ltd  000933.SZ  is set to
fall short of its annual output guidance due to a fresh round of
mandated power cuts in Yunnan province, the company said in a
statement late on Thursday.
    The most-traded aluminium contract on the Shanghai Futures
Exchange  SAFcv1  jumped 2.2% to 19,995 yuan ($3,095.92) per
tonne as of 0330 GMT on Friday on the prospect of weaker
aluminium supply.
    Yunnan Shenhuo, which makes up more than half of Shenhuo's
capacity, received a notice from local authorities on July 27 to
restrict its power loads by 30%, the listed parent firm said in
a filing to the Shenzhen Stock Exchange. 
    "Due to the uncertainty of when capacity can be resumed,
it's hard to accurately estimate how much production and
performance will be affected," said Shenhuo, adding that it is
in talks with the local government and grid operator about
securing hydropower supplies.
    Other Yunnan aluminium makers also received the notice, a
representative from Shenhuo's investor relations office told
Reuters.
    China's southwest Yunnan province, also home to several
major zinc smelters, has faced a power crunch in recent months
due to severe drought and measures to limit pollution. 
    The latest power curb would reduce the Shenhuo unit's
operating capacity to 550,000 tonnes, with utilisation rates at
61% now, the statement said.  urn:newsml:reuters.com:*:nL4N2P51WT 
    The subsidiary was previously forced to halt 150,000 tonnes
of capacity following a power curb notice on May 10, it said.
    Output affected by the curbs has totalled 35,000 tonnes so
far this year, so the unit will miss its 800,000-tonne
production target for 2021, the statement said.
    Yunnan, with abundant hydropower capacity, has become a hub
for energy-intensive metal production, attracting top producers
Aluminum of China  601600.SS  and Hongqiao Group  1378.HK  to
move some operations there. 
    
    
    ($1 = 6.4585 yuan)

 (Reporting by Min Zhang in Beijing and Mai Nguyen in Hanoi;
Editing by Sonali Paul)
 ((min.zhang@thomsonreuters.com; (8610) 5669-2105;))