China Witnesses a Surge in Aluminium Production Amid Strong Domestic Demand

China Witnesses a Surge in Aluminium Production Amid Strong Domestic Demand

In September, China’s primary aluminium production saw a 5.3% increase from the previous year, reaching 3.58 million metric tons, according to the latest data from the National Bureau of Statistics (NBS). This boost is attributed to robust demand and low current inventories of the metal.

Production Spike in Yunnan Province

Significant production increases occurred in the southwestern Yunnan province, known for being one of China’s top aluminium-producing regions. Smelters there maximized operations, aided by the enhanced hydropower supply starting late June. This situation marks a turnaround from the previous year when low rainfall prompted production cuts.

Low Inventories and Rising Prices

Despite the uptick in production, aluminium stocks have been notably low, driving prices upwards. Analysts credit the consistent domestic demand, especially from the solar and other power sectors, for keeping inventories low and prices high. The consequence is a noticeable rally in aluminium contract prices on the Shanghai Futures Exchange.

Profit Increase and Import Dynamics

The climbing prices resulted in a substantial profit increase for producers. The higher domestic prices have also driven a surge in aluminium imports, evidenced by a 63.2% year-on-year increase last month. Additionally, there was a significant uptick in bauxite imports, essential for aluminium production.

Expectations for the Fourth Quarter

As the year progresses, industry experts predict that the domestic output for the coming months will remain stable. Despite a reduction in rainfall in key production areas like Yunnan, substantial water reserves should prevent any immediate impact on production levels.

In broader production terms, China’s non-ferrous metal output reached record highs, underlining the overall health of the metal production sector within the country. The total output for the current year through September indicates a consistent rise compared to last year’s figures.

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