| LONDON, July 6
LONDON, July 6 China's provincial governments
are propping a quarter of domestic aluminium production through
power subsidies despite soft global demand, consultancy AZ China
said on Friday.
"These subsidies play a huge part in turning loss-making
operations into profitable centres...The number of plants under
water shrinks to just a handful," Paul Adkins, managing director
of the Beijing-based aluminium consultancy said in a report.
AZ China said five Chinese provinces are now subsidizing
power costs for aluminium smelters with more than five million
tonnes of China's operating capacity receiving up to RMB0.1/KWH
Another two million tonnes of capacity receives seasonal
power price cuts, as the wet season provides more water for
hydro schemes, especially in China's southwest, it said.
China is the world's biggest consumer of aluminium, but is
largely self sufficient. The industry is considered a
strategically important regional employer.
Last month, China's top aluminium producing province of
Henan rolled out power subsidies to smelters in a bid to revive
output, causing prices on the Shanghai Futures Exchange to fall
over three percent to the lowest in three years.
Henan province, accounts for about 20 percent of China's
annual aluminium production capacity of more than 23 million
(Reporting by Melanie Burton; editing by Keiron Henderson)