(Yicai) March 25 -- Electrolytic aluminum producers in Yunnan province, a major hydropower region of China, have been forced to reduce production as a result of curbs on electricity use amid seasonal dry weather.

Yunnan’s aluminum output had fallen by about 400,000 tons as of the end of February from November, when power restrictions were introduced following the start of the southwestern province’s dry season, according to a recent report by Beijing Capital Futures.

Electrolytic aluminum is produced through the process of electrolysis, which requires a lot of electrical energy.

Yunnan has opened it doors to electrolytic aluminum firms since 2018, with annual production capacity now at 6.1 million tons, according to official local data. That is expected to top 8 million tons after all projects become operational, accounting for almost a fifth of China's total.

Some electrolytic aluminum producers in Yunnan are only slowly resuming output due to concerns about the supply of electricity, according to the brokerage’s report, and only plan to reach full capacity by May.

The Ministry of Water Resources initiated a Level IV emergency response to the drought in Yunnan and neighboring Sichuan province on March 22.

Rainfall will likely remain low in April and May, leading to low hydropower generation in Yunnan, and if production of electrolytic aluminum resumes on a large scale ahead of schedule, it will worsen the electricity shortfall, the report said.

The profit on producing electrolytic aluminum has rebounded to about CNY2,400 (USD333) per ton. Yunnan’s producers are eager to get back to full output.

The province has been reducing power supply to industries such as electrolytic aluminum and increasing thermal power generation to ensure supplies. The province's total electricity generation rose 5.7 percent from January to February, with that from hydropower falling 10.8 percent and that from thermal power jumping 15.3 percent.

Yunnan will soon release 800,000 kilowatts of power capacity so electrolytic aluminum producers can get back to work, Shanghai Metals Market reported. That is equivalent to an an annual electrolytic aluminum production capacity of about 520,000 tons a year.

According to a report by the Kunming Power Exchange Center released in February, Yunnan will likely have an electricity shortage of about 27 billion kilowatt-hours this year, with the widest gap reaching 7.5 million kW.

Editor: Martin Kadiev