China Power Price Cut May Mean More Pain for Aluminum Market
- China may reduce power tariff from November to benefit users
- Tariff cut may drag aluminum to $1,400 a ton, Argonaut says
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A helping hand for China’s economy may end up hurting aluminum prices, worsening a glut that’s threatening producers worldwide.
On-grid power tariffs in China may be reduced as soon as next month to benefit industrial users and bolster growth, according to three people familiar with the matter. The cut to the price the state grid pays to power generators for electricity would likely be passed on to consumers, according to analysts at Argonaut Securities Asia Ltd. and Shanghai Cifco Futures Co. For smelters hooked up to state supplies, which account for a quarter of capacity, that could cut costs by 375 yuan ($59) a metric ton, according to Essence Securities Co.