reuters.com By Reuters Staff

ZHENGZHOU, China, April 20 (Reuters) – Severe power shortages in China’s southwestern Yunnan province are likely to cut aluminium production in the country’s fourth-largest producing province, analysts and producers said, but weak demand will cap price rises.

Yunnan, which accounts for about 12% of China’s aluminium capacity, has forced electrolytic aluminium producers to reduce their power usage since September last year after unusually low rainfall reduced hydropower generation.

Hydropower generates about 80% of the province’s electricity, and had attracted investment by energy-intensive aluminium smelters keen to lower their emissions.

The output of the metal in Yunnan jumped by 37% in 2022 from the prior year to 4.2 million tonnes.

Now, however, about 2 million tonnes of capacity, or 20% of the provincial total, is offline, Li Jiahui, an analyst at consultancy Shanghai Metals Market, told a conference in Zhengzhou.

Average rainfall in Yunnan during the first quarter of 2023 was 60% lower than the same period in typical years, the provincial government’s emergency management department said.

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