Zhuzhou Smelter Group Co, China's largest zinc smelter, has cut
production because heavy snow caused power shortages, a company
official said yesterday.
The power cuts have already reduced the country's aluminum
output, Beijing Antaike Information Development Co's chief analyst
Wang Feihong said.
Zhuzhou's zinc smelter, based in central Hunan Province hit by
the worst snowstorm in 50 years, had reduced production since
mid-January, Wang Jianjun, managing director of the company's
trading unit, said. He declined to elaborate, citing compliance
rules, according to Bloomberg News.
Aluminum output may decline 200,000 tons in the first quarter,
said Antaike's Wang.
China is the world's biggest producer of zinc and aluminum.
Snowstorms that swept central China's Hunan, Guizhou, Anhui and
Jiangxi provinces were the worst in decades, disrupting industrial
production, the China Meteorological Administration said. Coal
shipments have been boosted as snowstorms were forecast to
continue.
"Aluminum is affected the most as it uses a lot of electricity,"
said Li Ling, an analyst at Minmetals StarFutures Co in Shanghai.
"As for other metals, we reckon the threat lies more with delivery
rather than large-scale production cuts, and it's likely to be
short-term."
Lower zinc availability because of poor weather "is viewed as
the reason supporting domestic cash prices which have been higher
than front-month futures since the start of the year," added Wu
Peng, an analyst at Jinrui Futures Co.
"We don't expect any increase in imports because demand is
usually low at this time of the year, offsetting decreased supply,"
Wu said.
Production of most zinc smelters in snow-hit regions is
affected, and transport is another "challenge" because roads are
covered by ice, said Zhuzhou's Wang. The company's capacity in 2007
was 400,000 metric tons and output in 2006 was 370,034 tons,
according to Antaike.
China produced 3.75 million tons of zinc in 2007, up 18 percent
from 2006, according to the statistics bureau.
The snowstorms that swept Hunan Province were the worst since
1954, according to the China Meteorological Administration.
The power shortages may reduce aluminum output in China, the
world's biggest producer of the metal, by 200,000 tons this
quarter, according to Antaike.
Aluminum production will now total 15.4 million tons this year.
Production was 12.3 million tons last year, according to the
National Bureau of Statistics.
(Shanghai Daily January 29, 2008)
