- 22 Aug 2022
- ICICIdirect Research
CHINA'S SICHUAN REGION FACING SEVERE POWER OUTAGES ADVERSELY IMPACTING METAL PRODUCTION IN REGION
News: The Chinese province of Sichuan activated its highest emergency response on Sunday to deal with extremely outstanding power supply deficiencies, adding to manufacturers’ woes in the region as they shut down factories. Extreme high temperatures since July 2022, along with record electricity demand, have caused gaps in power supply. Current peak load of electricity demand in Sichuan jumped to 65 million kilowatts, an increase of 25% over the previous year.
View: The current power crisis in the Sichuan region has adversely impacted metal production schedule in the region. The power cuts have affected more than 70% of steel mills in Sichuan, which have either halted production or started rationing. Henan Zhongfu Industry Company, an aluminum smelter, has also halted production for a week for some production units in Sichuan. Hence, metal production schedule in Sichuan region has been adversely impacted due to this development. The current power outage in China, coupled with shutting down of smelters in Europe due to higher energy cost (in Europe) is aiding an uptick in metal prices.
Impact: Positive.