Analysis of the change of molten aluminium ratio at Chinese aluminium smelters

SHANGHAI, Jan 11 (SMM)—According to SMM survey, molten aluminium accounted for 66.6% of China’s total aluminium output in December 2020, a decrease of 1.7 percentage points from the previous month. The decline in the proportion of molten aluminium was mainly due to increased proportion of ingots at smelters in north China. The decline was more prominent in Henan, Inner Mongolia and Ningxia. In Henan Province, Henan Zhongfu and Dengdian Group did not produce aluminium ingots due to strict environmental inspections, while the proportion of ingots in other three smelters (Henan Wanji, Jiaozuo Wanfang and Yugang Longquan) increased from November. Some smelters in Inner Mongolia increased ingot output significantly due to weaker demand for molten aluminium from nearby regions. In south-west China, the proportion of ingot output at smelters in Guangxi, Guizhou, and Yunnan recorded a small increase, mainly due to the strong demand for molten aluminium from nearby downstream producers.

Based on the latest SMM survey of aluminium smelters, the spot market and downstream processors, it is expected that the proportion of molten aluminium will continue to decline in January-February compared with December, and the decline will accelerate. The main reasons are as follows. (1) Weaker demand for molten aluminium from nearby aluminium processing enterprises will drive aluminium smelters to increase ingot output. (2) In light of continuous decline in processing fees of aluminium billets, rods and alloys, spot premiums of aluminium ingots will give smelters incentive to actively increase the amount of ingots. (3) The proportion of ingots in north China is expected to increase, and aluminium plants in the southwest region also expect higher ingot proportion in January and February due to holiday factor.

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