Recently, due to an imbalance between electricity supply and demand, many regions have implemented power rationing measures, prioritizing residential electricity consumption and imposing restrictions primarily on industrial electricity use. Among industrial sectors, electrolytic aluminum—being a major electricity consumer—has been the first to face stringent controls. Specifically, Yun Aluminum Co., Ltd. has reduced its electrolytic aluminum production by 770,000 tons, while Shenhua Co., Ltd.'s Yunnan facility has scaled down its capacity to just half of its original 750,000-ton output.

The direct consequence of the reduction in primary aluminum production is a sustained rise in primary aluminum prices. Reportedly, the current price of primary aluminum has already reached 22,620 yuan per ton, just one step away from its historical peak. At present, the average profit per ton of aluminum has climbed to 8,500 yuan. For large aluminum and power enterprises like Weiqiao Entrepreneurial Group and Xinfa Group—companies that boast integrated industrial chains and exceptional cost-control capabilities—the profits are even more astonishing.
 

Recently, the small northern Shandong city of Binzhou has topped search trends. With an annual electricity consumption of 123.537 billion kilowatt-hours in 2020, Binzhou ranks third nationwide in electricity usage—only behind China’s largest city, Shanghai, and the industrial powerhouse Suzhou. Its electricity consumption even exceeds that of mega-cities such as Chongqing, Beijing, Guangzhou, Shenzhen, and Tianjin. Yet Binzhou has a population of just 4 million and a GDP of only 246 billion yuan—a figure that is barely a fraction of those mega-cities’ GDPs.

The reason lies in the fact that Weiqiao Entrepreneurial Group, the world’s largest aluminum-electricity enterprise headquartered in Zouping City, Binzhou, owns 6.46 million tons of compliant electrolytic aluminum capacity—most of which is located in Binzhou City itself, with fewer than 1 million tons having been relocated to Yunnan. As electrolytic aluminum production is an enormous electricity consumer, the amount of power it consumes is simply astronomical, which is why Binzhou City has surpassed most other cities to become one of the nation’s top three energy-consuming cities.

Currently, the direct current (DC) electricity consumption per ton of aluminum produced by large-scale electrolytic cells in China is approximately 13,000 kWh. In 2020, China’s output of primary aluminum reached 37.317 million tons, accounting for 57.18% of the global total. Thus, the total electricity consumption for primary aluminum production alone amounted to roughly 485.121 billion kWh. In contrast, China’s total electricity consumption for the entire society in 2020 was only 7,511 billion kWh—meaning that primary aluminum production alone accounted for about 6.46% of the nation’s total electricity consumption.

Currently, most regions have gradually shifted from a GDP-centric approach to one that emphasizes scientific development. Particularly in the context of increasingly stringent carbon neutrality policies, dual-control targets for energy consumption—covering both total energy consumption and energy intensity—have become key criteria for evaluating local governments. This is designed to compel enterprises to undergo transformation and upgrading, carry out technological upgrades, enhance production efficiency, and reduce energy consumption. The goal is not merely to control carbon emissions but rather to use energy consumption as a benchmark for measurement. Recently, Yunnan experienced the largest reduction in primary aluminum production precisely because its hydropower-based aluminum industry, which had previously flourished thanks to abundant hydroelectric resources, led to poor performance in meeting Yunnan’s dual-control targets for energy consumption in the first half of 2021. As a result, Yunnan was ultimately forced to shut down high-energy-consuming industries in order to achieve its energy consumption targets.

Therefore, judging from the current domestic policies and broader economic environment, the likelihood of a substantial increase in primary aluminum production is very low. Coupled with the recent sharp rise in coal and alumina prices, primary aluminum production costs have soared, leading to a severe supply-demand imbalance. Moreover, this year the state has already released state reserves of aluminum three times; it’s reasonable to expect that the intensity of subsequent reserve releases will gradually diminish. Recently, the National Development and Reform Commission issued a clear notice regarding the tiered electricity pricing policy for the primary aluminum industry. As a result, inefficient primary aluminum producers will face rising costs, and aluminum prices still have room to climb in the future.