China Achieves Record High Primary Aluminium Output in August
China's primary aluminium production experienced a significant surge in August, reaching an all-time monthly high. Data released by the National Bureau of Statistics (NBS) on Friday revealed that China's output increased by 3.1% year-on-year, reaching an impressive 3.6 million metric tons. This surge can largely be attributed to increased production in the southwestern province of Yunnan, following the recovery of hydropower generation.
The figures also indicated a 3.4% increase compared to July's output. On a daily basis, August witnessed an average aluminium output of 116,129 tons, according to Reuters' calculations.
Notably, during August, an annual capacity of 390,000 tons was brought back into operation, equivalent to 32,500 tons on a monthly scale. Much of this resurgence in production can be attributed to Yunnan, as outlined in a survey conducted by the consultancy firm Mysteel.
Historically, from September 2022 to June, companies in China's fourth-largest aluminium producing region had been ordered to reduce their output due to a drought that resulted in a sharp decline in hydropower capacity. However, the third quarter saw an increase in operations in Yunnan, compensating for a decrease in Shandong province, which implemented planned cuts to meet stringent carbon emissions targets.
Another factor contributing to Yunnan's aluminium production growth is the favorable profit margins. Rising metal prices, driven by government interventions to support the property market, have boosted these margins. The property market, in addition to transportation and packaging, continues to be the primary consumer of this lightweight metal.
Financially, the most-traded aluminium contract on the Shanghai Futures Exchange experienced a 3.8% increase last month, marking the steepest monthly climb since November.
Cumulatively, from January to August, China's aluminium production reached 27.23 million tons, marking a 2.9% year-on-year increase.
Looking ahead, analysts anticipate that September's output is likely to mirror the figures seen in August. Yunnan, currently benefiting from ample rainfall and water supply, appears poised to continue its robust production trend through September and October. However, concerns have been raised regarding potential consumption patterns. If consumption does not experience a significant rebound, the elevated output may lead to increased inventories, potentially putting pressure on prices.
From a broader perspective, the production of 10 nonferrous metals, including aluminium, copper, lead, zinc, and nickel, increased by 6.1% year-on-year, reaching 6.29 million tons. The year-to-date output for these metals also registered a 6.8% growth, totaling 48.56 million metric tons. This category encompasses additional metals such as tin, antimony, mercury, magnesium, and titanium.
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