According to SMM statistics, domestic aluminum production in January 2024 (31 days) was 3.562 million mt, up 4.2% YoY. The average daily output of the domestic aluminum industry in January remained stable at around 114,900 mt. In January, the operating rate of domestic aluminum processing enterprises declined slightly. The output of aluminum billets and other products in the northwest, southwest and other regions decreased. The aluminum liquid ratio in the industry fell by 3.7 percentage points MoM and 11.2 percentage points YoY to about 70.36%. According to SMM aluminum liquid ratio data, domestic aluminum ingot casting volume decreased by 24% YoY in January to around 1.06 million mt. In January, the main domestic aluminum ingot production areas were Xinjiang, Inner Mongolia, Yunnan and other regions. The total output of aluminum ingots in these three provinces was approximately 590,000 mt, accounting for 55.7% of the total.

Production capacity changes: In January, domestic aluminum companies mainly maintained stable operations, and there were no large-scale production suspensions or resumptions during the month. As of the end of January, SMM statistics showed that the domestic aluminum built production capacity was approximately 45.19 million mt, the domestic aluminum operating capacity was approximately 41.98 million mt, and the industry operating rate increased by 3.9 percentage points YoY to 92.9%.

Output forecast: In February 2024, domestic aluminum companies mainly maintained stable operations. Yunnan is still in the dry season. The province's supply of wind power, PV and thermal power have increased year-on-year, but local aluminum companies are waiting for more information to clarify the resumption of production. SMM predicts that most enterprises in the province will maintain stable operations from February to March. There are no expectations for production capacity changes in other regions. SMM predicts that the domestic aluminum operating capacity may stabilize at around 42 million mt in February. The average daily domestic aluminum production in February is mainly stable MoM. It is expected that domestic aluminum production in February (29 days) will total 3.33 million mt, a year-on-year increase of 7.9% (28 days in February last year). February coincides with CNY holiday in China. The operating rate of domestic downstream aluminum liquid processing companies dropped, and the amount of ingots cast in the industry increased in stages. According to SMM's preliminary survey and calculation, the proportion of aluminum liquid in the industry may drop to around 66% in February, up 5 percentage points YoY.

On the demand: domestic aluminum downstream operating rate fell in January, among which the aluminum plate/sheet and strip and extrusion industries started to weaken significantly. As CNY approaches, some small and medium-sized enterprises, especially those located in north China, suspended production and took CNY holidays. During the month, the PV extrusion and automotive aluminum sectors were driven by companies' stockpiling, and the operating rates remained stable. The operating rates of the aluminum wire and cable industry was supported by orders from the power grid, and the operating rates improved slightly from the previous month. In January, affected by factors such as downstream pre-holiday stocking, low industry ingot production, and poor transportation, domestic aluminum ingot inventories continued to decrease, with the total inventory lower than the historical level for the same period. In February, domestic downstream aluminum operating rates remained weak. However, with the amount of ingots cast lower than the same period in history, the total inventory accumulated during CNY in 2024 may not exceed the level of the same period last year. SMM estimates that the total domestic aluminum ingot inventory may reach about 550,000-600,000 mt on the last day before CNY in February, 750,000-800,000 mt on the first day after CNY, and 900,000-950,000 mt after CNY.