Market Nuggets: Barclays: Chinese Power Price Hikes Supportive For Aluminum

(Kitco News) -- Aluminum is being supported by news that by china will raise electricity prices for non-residential users for the first time since November 2009, say analysts with Barclays Capital. China is facing power shortages this summer due to squeezed power-plant margins, low water levels and strong domestic demand. Barclays says the shortages should affect Aluminum the most among the base metals, which is also ture for power price increases, given the power intensity of Aluminum smelting. Nickel pig iron producers are also likely to suffer as this is a comparatively power-intensive process. out of the nine provinces that have Aluminum-smelting producation, seven have some capacity that purchases power from the grid and therefore will see their costs rise, and at least 28% of chinese Aluminum production that will be affected by the increase in power tariffs, Barclays says."This increase in power prices will put further upward pressure on the production costs of an industry and a country where marginal production costs are already at a record high," Barclays says. Additionally, tightness in power availability will affect the South African aluminum industry, Barclays says.