SHANGHAI, Mar 6 (SMM) – China produced 5.4 million mt of alumina in February, with metallurgical-grade materials accounting for 5.17 million mt, according to an SMM survey.
Last month, production of metallurgical-grade alumina averaged 178,000 mt per day, down 8.19% from February 2019 and 0.52% from January as some refineries in north China trimmed output amid the COVID-19 outbreak.
Some alumina refineries began to recover production in late February, as their inventories of imported and domestic bauxite recovered to safe levels after truck transport capacity tightness eased and private mines in Henan resumed work gradually. Xinghua Technology has recovered to 700,000 mt/year, East Hope’s plant in Sanmenxia ramped up to 1.5 million mt/year and its plant in Jinzhong climbed to 2.2 million mt/year.
However, refineries in Shanxi such as Xing’an Chemical and Xinfa in Xiaoyi as well as Huaqing, Liulin and Aokaida, are unlikely to recover or step up production in the short term, as most of private mines there remain closed.
As of early March, metallurgical-grade alumina capacity in operation declined to 62.86 million mt on an annualised basis, with the virus outbreak affecting 4.65 million mt of capacity.
Some refineries in Henan are likely to recover production after the heating season ends in the middle of March, while higher inventories of raw materials and a rally in spot prices are likely to encourage some refineries that have scaled back operations to recover.
SMM estimates China’s production of metallurgical-grade alumina at 5.34 million mt in March, with the daily output to falling to 172,000 mt.
SMM data also showed that China’s primary aluminium output shrank to 2.87 million mt in February, to produce a year-over-year increase of 6.9%.
As of the end of February, there was 36.6 million mt/year of primary aluminium capacity in operation in China, while existing capacity was 40.99 million mt on an annualised basis. Operating rates across Chinese primary aluminium producers dipped 0.2 percentage point from end January to 89.3%, as newly-commissioned projects were still ramping up.
In the first two months of 2020, China’s production of primary aluminium grew 5.1% year on year to 5.94 million mt. That was faster than consumption growth, growing inventories. As of March 5, social inventories of primary aluminium ingots stood at 1.49 million mt, up 151.35% from the end of 2019.
The COVID-19 outbreak has yet to cause primary aluminium production cuts, but some high-cost producers are mulling bringing annual maintenance forward as aluminium prices pulled back and costs grew.
Newly-commissioned primary aluminium projects in Yunnan, Inner Mongolia and other regions are still ramping up, while the commissioning of projects under construction is likely to be delayed due to weaker aluminium prices and manpower issues.
Primary aluminium capacity in operation is expected to grow to 36.75 million mt in March, and monthly production is estimated to increase to 3.08 million mt, 3.3% higher than the same month of 2019.
