In October, domestic aluminum operating capacity increased, but the resumption of some aluminum smelters did not meet expectations [SMM Data]

According to SMM statistics, domestic aluminum production in October 2024 (31 days) increased by 1.69% YoY. Early in October, the capacity resumed from technical renovations gradually started producing, but the resumption of some smelters did not meet expectations, and full resumption might be delayed. Driven by the September-October peak season, the demand for downstream alloy products remained stable with a slight increase. In October, the proportion of liquid aluminum continued to rise by 0.2 percentage points MoM and increased by 3.6 percentage points YoY to around 73.93%. Based on SMM data on the proportion of liquid aluminum, the casting ingot production of domestic aluminum in October decreased by 9.23% YoY to around 965,300 mt.

Capacity changes: By the end of October, SMM statistics showed that the existing capacity of domestic aluminum was about 45.56 million mt, and the operating capacity was about 43.62 million mt, with the industry's operating rate up 0.64 percentage points YoY to 95.74%. The resumption of capacities from technical renovations in Sichuan and Guizhou and the new capacities in Xinjiang contributed to the operating capacity in October. Additionally, a replacement project in Inner Mongolia is also progressing steadily.

Production forecast: Entering November 2024, the resumption and ramp-up of new capacities are expected to further increase domestic aluminum operating capacity. However, due to the technical renovation and shutdown of an aluminum smelter in Henan, which is expected to affect 70,000-80,000 mt/year capacity, the overall increase in operating capacity in November is limited. SMM forecasts that by the end of November, the annualized operating capacity of domestic aluminum will reach 43.77 million mt/year. As November gradually transitions into the off-season, coupled with aluminum prices fluctuating at highs, some end-use sectors may adopt a wait-and-see approach, negatively impacting the demand for alloy products such as aluminum billets. It is expected that the proportion of liquid aluminum in October will adjust back to around 73%. Continued attention is needed on the resumption of aluminum production in various regions and the operating rate of downstream sectors such as aluminum billets.

Data Source: SMM