According to SMM statistics, in May 2024 (31 days), domestic aluminium production reached 3.637 million mt, up 4.61% YoY. In May, aluminium plants in Yunnan maintained resumption, and an aluminium plant in Inner Mongolia fully resumed production capacity, driving aluminium production in May. However, the proportion of aluminum liquid saw a slight pullback due to the reduction in aluminum billet production, down 0.7 percentage points MoM and down 2.3 percentage points YoY to around 73.27%. Based on SMM's aluminum liquid proportion data, the domestic aluminium ingot volume in May increased by 14.24% YoY to approximately 971,000 mt.
Changes in production capacity: As of the end of May, SMM statistics showed that the existing capacity of domestic aluminium was approximately 45.19 million mt, and the operating capacity of domestic aluminium was about 42.961 million mt, with the industry's operating rate increasing by 5.01 percentage points YoY to 95.06%. The increase in operating capacity in May mainly comes from the gradual resumption of production in Yunnan. Currently, the improvement in power supply in Yunnan, together with high aluminium prices, stimulated the second round of production resumption in local smelters. As of June 7, the annualized operating capacity in Yunnan is around 5.45 million mt, up about 300,000 mt MoM, with the remaining capacity expected to be fully resumed by the end of June. Additionally, a smelter in Inner Mongolia, which had previously halted production due to a malfunction, has resumed production, contributing to the domestic aluminium operating capacity in May.
Production Forecast: In June 2024, the domestic aluminium operating capacity is expected to mainly rebound, mainly due to the steady recovery of power supply in Yunnan, with the remaining capacity steadily resuming production. Additionally, the new project of Huayun Phase III in Inner Mongolia is expected to continue its commissioning. The installed capacity in June is expected to increase to 45.36 million mt. Considering the capacity changes in other regions, SMM expects the annualized domestic aluminium operating capacity to increase by approximately 300,000 mt MoM to 43.27 million mt by the end of June, with a monthly production of around 3.54 million mt (30 days). Furthermore, in May, billet factories in Guangxi ceased production due to losses, which increased the ingot volume of local aluminium plants. According to the SMM survey, the production of aluminum billets in Guangxi resumed, and the domestic aluminium ingot production is expected to adjust in June, with the industry’s aluminum liquid ratio rebounding to 75%. We need to pay attention on the resumption of aluminium smelters in Yunnan and the operating rate of downstream aluminum liquid users such as billet factories.
