Production Cut News Spread Recently: Domestic Aluminum Operating Capacity Shows Mixed Changes [SMM Data]

According to SMM statistics, in November 2024 (30 days), domestic aluminum production increased by 2.74% YoY, and cumulative production from January to November 2024 increased by 3.86% YoY. In November, some domestic aluminum smelters underwent pot maintenance due to high pot age and winter environmental protection-related controls requiring production cuts. There have been announcements of production cut plans, coupled with increased alumina cost pressures, leading some enterprises to plan maintenance. During the month, resumption or new projects in Sichuan, Xinjiang, and other regions continued to progress, with daily aluminum production in November only slightly increasing MoM. The proportion of casting ingots in north-west China and other regions increased, while the proportion of liquid aluminum decreased by 0.6 percentage points MoM, remaining flat YoY. Based on SMM's liquid aluminum proportion data, the casting ingot volume in November increased by 2.93% YoY to approximately 956,500 mt.

Capacity Changes: As of the end of November, SMM statistics show that the existing capacity of domestic aluminum smelters was about 45.71 million mt, with an operating capacity of approximately 43.68 million mt, and the industry's operating rate increased by 0.46 percentage points YoY to 95.56%. Currently, domestic aluminum smelters show mixed changes in operating capacity, with increases mainly from the ramp-up of new projects in a Xinjiang aluminum smelter and the resumption of production in Sichuan and Guizhou regions. Decreases mainly come from partial production cuts in a Henan aluminum smelter due to environmental protection requirements and technical maintenance in Chongqing and Guangxi regions.

Production Forecast: Entering December 2024, the ramp-up of new capacities and capacity resumptions are expected to further increase domestic aluminum operating capacity. However, a Guangxi aluminum smelter's pot maintenance is expected to affect 100,000 mt/year capacity, and small-scale pot maintenance in Sichuan and Chongqing aluminum smelters is anticipated. Therefore, the overall increase in operating capacity in December is expected to slow down, with SMM forecasting that the annualized operating capacity will reach 43.69 million mt/year by the end of December. December will enter the traditional off-season, coupled with previous export rush depleting some December orders, leading to weaker downstream demand and production cuts in some billet plants. The proportion of liquid aluminum is expected to adjust to around 72% in December. Continued attention is needed on the changes in aluminum capacity in various regions and the operating conditions of downstream sectors such as aluminum billets.