20 April 2022 – China continues to significantly reduce steel production. In 2022 it is expected to fall by a further 12%. The US food industry is running out of aluminum. And India’s energy shortage is forcing aluminum and steel producers to cut production.
China continues to cut steel production
China, the world’s largest steel producer, has announced that it will continue to cut steel production significantly in 2022. Chinese crude steel production had already been cut by more than 3% in 2021. On April 19, 2022, the National Development and Reform Commission announced the new target, which is to reduce crude steel production in China by approximately 12% in 2022. This is intended to support the Chinese government’s plan to shift the economy from a purely quantitative to a higher-quality foundation.
USA: Food industry lacks aluminum
The us food and beverage industry is running out of raw materials for packaging, particularly aluminum. With the loss of Russian aluminum supplies due to Western sanctions, U.S. food manufacturers urgently need to establish new and reliable sources. According to recent data, the U.S. beverage industry alone requires more than 145,000 MT of imported aluminum per month to meet its packaging material needs.
India: energy shortages intensify
India is suffering from a dramatically worsening energy shortage. From March to April 2022 alone, the shortage has intensified by about 180%. And is once again 40% higher than the last extreme peak in October 2021. Still India, which generates 75% of its electricity from coal, lacks sufficient raw materials for its power plants. Stocks at coal fired power plants have fallen to an average of 9 days of inventory.
Indian aluminum and steel industry without coal
This also has an impact on industries such as steel and aluminum. Here, for example, production cuts of 50% in the stainless steel sector are reported due to energy cuts. Coal India has cut coal supply to aluminum smelters and steel makers by another 30% compared to last year.
Nepal dependent on India
The Indian neighbor Nepal, which has to buy more than 50% of its energy requirements from abroad at peak times, has reported that for weeks it has been unable to obtain electricity supplies from India, especially at night.
This has already led to massive outages in industrial production, as entire industrial regions have had to shut down due to power shortages.
No quick solution in sight
A solution to India’s energy problem is currently not in sight. Energy production cannot be expanded without coal. And coal on the world market is in short supply.
By the end of 2023, the Indian government expects a further increase in energy demand of more than 15% – the strongest and fastest increase in 38 years. And the summer heat in India has already started very early this year, significantly increasing the use of air conditioning and thus further exacerbating the energy problem for the industry.
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