The energy crisis in China provoked an increase in electricity prices in industry. The rise in price of electricity caused a reduction in the production of metals, Bloomberg writes. The agency indicates that the country has encountered the effects of the crisis.
According to the study of MySteel, due to the electricity deficit in China, the production of copper, aluminum and zinc has decreased in September, which caused the rise in prices for metals. Due to the lack of fuel for power plants, the Chinese power plant is preparing to raise prices for electricity by 20 percent, which is twice the current limit. The cost of electricity for the most energy-intensive industries, including metal producers, will not be limited.
Among the metallurgical enterprises with the greatest risk of increasing electricity bills are subject to nickel and zinc companies, the profitability of which is already quite low, says Shanghai East Asia Futures CO Van Yue analyst. These two metal are most often used in steel production. However, the impact on the production of aluminum, which most suffered from the rationing of electricity at the beginning of the year, may be less, since manufacturers receive stable profits against the background of growth in demand for light metal, which is used in a variety of industries.
In August, coal reserves on the main power plants of China reached a 10-year low. The causes of the electricity deficit called extreme weather conditions, the growing demand for Chinese exports, the country’s efforts to reduce carbon emissions and geopolitical tensions in relations with Australia, which has long been the main supplier of coal in China.