SHANGHAI, Jan 28 (SMM) - SMM estimates that China's aluminium output will be 3.19 million mt in January, a drop of 2.6% year-on-year. The daily average output will be 103,000 mt, up 600 mt MoM. The proportion of aluminium liquid in smelters’ product portfolio is expected to be 64.1% in January, a decrease of 1.4 percentage points MoM, but up 0.8 percentage point YoY.
The operating aluminium capacity in China continued to increase in January. A total of 530,000 mt of aluminium capacity was resumed across Wenshan in Yunnan, east Inner Mongolia, Guizhou, and Shanxi, but the output that was actually released was low. The domestic operating aluminium capacity stood at 38.22 million mt/year as of January 28, while the installed capacity stood at 43.97 million mt/year, and the average operating rate stood at 86.9%.
In February, some capacity in Yunnan, Inner Mongolia and Guizhou will be resumed, and the capacity that was resumed earlier will continue to ramp up the output. As such, the domestic daily average aluminium output is expected to rise further to 105,000 mt, and the domestic total output is estimated to be around 2.94 million mt.
The domestic downstream aluminium consumption will decline sharply month-on-month in February due to the Chinese New Year (CNY). The downstream processing enterprises in Henan, Shandong and Hebei will re-open later than usual after the CNY this year due to the environmental protection regulations for the Winter Olympics.
SMM predicts that the domestic aluminium ingot inventory will enter the accumulation cycle after the CNY, and the inventory may increase to 1.1 million mt by the end of February.
