Recently, the State Administration for Market Regulation and the Standardization Administration of the People's Republic of China jointly issued the energy consumption ceilings for aluminium and alumina production per unit of product, which will be implemented from January 1, 2024. 

The aluminium industry is an enormous energy consumer, with thermal power being the dominant source of energy. Its production process is accompanied by high energy consumption and high carbon emissions. 

After China set the "dual carbon" goal (carbon peak and carbon neutrality), the country’s aluminium production capacity has basically reached a ceiling, and the capacity utilisation rates have been constrained. 

SMM data showed that the operating aluminium capacity in China stood at 40.26 million mt as of the end of January, a drop of 170,000 mt from the end of 2022, but 1.87 million my higher than a year ago. 

The Chinese economic recovery gathered pace since late last year when China lifted its Covid restrictions, which will benefit aluminium demand. 

In the medium and long run, aluminium prices will still have upside room.