Chinese province urges aluminum producers to cut energy consumption

China’s southwest Yunnan province ordered electrolytic aluminum producers to reduce their electricity use this week, the companies told Reuters on Tuesday.

Yunnan’s decision is another sign that rising energy prices are having a strong impact on aluminum production worldwide, although domestic prices have had a limited effect for now.

Producers were required to cut energy use by about 10% of their normal consumption from Sept. 13 to 14, said sources at both companies, who declined to be named because they were not authorized to discuss the order publicly.

The companies had already cut power consumption by 5% from normal usage from September 10 to 12, following an order issued by the Dali Power Supply Bureau, part of Yunnan Power Grid.

The power outage in China’s southwest province came after scanty rains in the region this year reduced the supply of hydroelectric power, which normally accounts for 75% of its electricity.

Yunnan Power Grid declined to comment when contacted by Reuters. The Dali Power Supply Bureau could not be contacted immediately.

“This affects about 10% of our capacity,” said a source at a large smelter with an annual capacity of 900,000 tonnes of electrolytic aluminum.

Yunnan, with an annual operating capacity of 5.25 million tons of electrolytic aluminum, accounts for about 10% of China’s capacity.

The Shanghai Metals Market predicts China’s aluminum production in September will decline 3.4% month-on-month to 3.37 million tonnes, following the Yunnan power rationing.

It remains unclear whether power restrictions would be extended. Hydroelectric power generation is typically weak from November onwards, after the rainy season ends.