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)
