China’s Aluminum Production Review In July And Forecast In August

SHANGHAI, Aug 10 (SMM) –

According to statistics from the SMM, China's domestic aluminum output in July 2023 (spanning 31 days) amounted to 3.568 million mt, representing a year-on-year increase of 1.95%. The average daily production in July experienced a month-on-month surge of over 3,000 mt, reaching approximately 115,100 mt. From January to July, the total domestic aluminum production tallied up to 23.676 million mt, marking a year-on-year cumulative growth of 2.7%. In July, the molten aluminum ratio in the industry experienced minor fluctuations while maintaining a general stability, with the increased capacity in the downstream part of the sector leading to a reduction in ingot volumes among certain companies. This resulted in a month-on-month rise of the molten aluminum ratio by 0.6 percentage points, hitting around 72.6%. Based on SMM's molten aluminum ratio calculations, July's domestic aluminum ingot volumes saw a year-on-year decrease of 16.6%. The overall volume of domestic ingots from January to July was roughly 7.2 million mt, indicating a year-on-year drop of 12.2%

Production Capacity Changes: July saw a considerable rise in China's operational production capacity, largely attributed to a significant production increase in the Yunnan region. The resumed production reached around 1.22 million mt, bringing the total scale of Yunnan's resumed production to approximately 1.48 million mt when combined with June's figures. This total includes the introduction of 140,000 mt from relocated production capacity. The primary contributors to the domestic production decrease in July were the cessation of 150,000 mt of relocated production capacity in Shandong and a decrease of 80,000 mt due to maintenance operations in Sichuan enterprises, resulting in an overall reduction of around 230,000 mt. According to SMM statistics, the installed capacity for aluminum in China is roughly 45.19 million mt, which includes capacities that have been constructed but are not yet operational or have not been phased out. The operating capacity has grown to nearly 42.16 million mt, hitting a historical high. The national aluminum operation rate was at approximately 93.3%, marking an increase of 2.7 percentage points over the previous month.

Production Forecast: As we enter August, major aluminum factories in Yunnan are steadily resuming production. Currently, there is still nearly 620,000 mt of capacity waiting to resume production within the entire province of Yunnan. Of this, 490,000 mt are expected to be back online by the end of August. Moreover, Yunnan has some additional relocated production capacity, and there is an ongoing expectation of more capacity coming online in August. Considering the capacity changes in other regions, SMM predicts that by the end of August, the total operating aluminum capacity in China may approach close to 42.7 million mt. The total domestic aluminum production for August (31 days) is expected to reach about 3.60 million mt, a year-on-year increase of 3.5%. Moving forward, it will still be necessary to continuously monitor the power and aluminum business operations in the southwest region and other areas.