China’s aluminium supply shortage keeps prices near 13-year high with little sign of easing amid power cuts, emission targets

Production of power-intensive metals has been scaled back dramatically as nation strives to conserve electricity and reduce pollution

Beijing plans to peak carbon emissions by 2030, and analysts said it means more cutbacks are coming

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The price of aluminium was about US$2,700 a tonne on Friday, after touching a 13-year high of US$3,000 earlier this month. Photo: Reuters

Published: 11:59am, 29 Oct 2021Updated: 3:20pm, 2 Nov 2021

Global transport, packaging and construction sectors will have to brace for more shortages in aluminium as China’s power-intensive metals industry buckles under the pressure of a national power crisis while Beijing maintains a cap on smelting to meet emissions targets.

Alongside curtailed magnesium output – another power-intensive metal – aluminium production in China has suffered a 2.3 million tonne drop since the onset of the power crunch in September, when widespread power rationing swept the country amid a race to cut down on carbon emissions and reduce power generation.

The price soared to a 13-year high of US$3,000 a tonne in October, the highest mark since 2008. Before reaching that milestone, aluminium was generally priced in the range of US$1,500 to US$2,000 a tonne. It cooled to about US$2,700 a tonne on Friday.

The hit to the world’s biggest aluminium supplier’s output was not an overnight phenomenon and has been sliding since China’s power woes began to rear their head late last year. While China is no stranger to blackouts during peak power-usage seasons, power consumption last winter exceeded that of the summer months for the first time in about 10 years. More than a dozen cities across various provinces set caps on electricity usage for factories.

	Megawatt hours to produce 1 tonne
Steel	4-6
Magnesium	35-40
Aluminium	16-17

SCMP

Those blackouts continued periodically through the year, until September when power rationing measures were imposed in more than half of China’s provinces.

And analysts expect aluminium production to continue to soften for months to come, not only because of sustained power shortages, but because the Chinese government has held firm on curbing aluminium smelting.

The State Council’s action plan to peak carbon emissions by 2030 was released on Tuesday, and analysts said it signalled more cutbacks to come.