Aluminum price soars as China cancels tax incentive on exports
The export tax rebate was also removed for copper and lowered for some refined oil, solar, battery and non-metallic mineral products.
China’s reopening is disrupting energy markets as the abrupt shift from Covid Zero shutters industry and upends the usual flow of commodities.
A dramatic surge in infections is having a short-term impact on the supply chain for solar companies, the China Silicon Industry Association said in a statement on Wednesday. Many manufacturers of the wafers used in solar panels have curtailed operations, with some producing at just 60% to 70% of capacity, it said.
The supply shock comes at the tail end of a record-breaking year for solar installations in China. To keep up production, some renewables firms such as Longi Green Energy Technology Co. are operating closed loops in their factories to keep the virus at bay.
Coal markets are also being affected by its rampant spread. Mysteel reports that production of coking coal used by the steel industry has halved in the top mining hub of Shanxi, with 10 mines suspending output and another 31 cutting back. Miners have put workers in closed loops, but the impact could last for about another two weeks until the outbreak wanes, Mysteel said.
But for thermal coal, abandoning strict virus controls has improved supply logjams, which could mean that China escapes the shortages that typically afflict the economy during peak winter demand.
Factory shutdowns have led to a slight decrease in coal consumption at power plants, according to Fengkuang Coal Logistics, at a time of the year when demand usually rises because of heating needs. The research firm said it expects benchmark prices at the port of Qinhuangdao to fall to about 1,000 yuan ($143) a ton in coming weeks, from about 1,300 yuan now.
Coastal provinces have enough fuel stockpiled for 20 days use, and demand could be further constrained as more small factories opt to take longer holidays this year, Zhang Yupeng, an analyst at the China Coal Transportation and Distribution Association, told a briefing on Wednesday. The association expects power demand to recover strongly after the Lunar New Year holiday as more government stimulus kicks in.
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