Aluminum Profit Recovery: Capacity Under Maintenance Gradually Resumes Production in Early February [SMM Data]

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SMM  February 27: According to SMM statistics, China's aluminum production in February 2025 (28 days) was up 0.4% YoY but down 9.5% MoM. The operating capacity of domestic aluminum increased MoM in February, mainly due to the recovery of aluminum profits, which stimulated the resumption of production in enterprises that had previously implemented production cuts and the activation of replacement projects. During this year's Chinese New Year holiday, many aluminum smelters' casting ingot production fell short of expectations. Coupled with stable downstream purchases after the resumption of work and production, the proportion of liquid aluminum in the industry rose 1.7 percentage points MoM and 6.7 percentage points YoY to 71.0%. Based on SMM's liquid aluminum proportion data, the casting ingot production of domestic aluminum in February decreased by 18.4% YoY to approximately 969,000 mt.

Capacity Changes: As of the end of February, SMM statistics show that the existing capacity of domestic aluminum was approximately 45.81 million mt, while the operating capacity was around 43.64 million mt. The industry's operating rate increased by 0.07 percentage points MoM and 2.26 percentage points YoY to 95.3%. Currently, the operating capacity of domestic aluminum smelters is in a slight growth phase. Following the recovery of aluminum profits during the month, several enterprises in Sichuan, Guangxi, and other regions that had previously implemented production cuts began resuming production in early February. Additionally, a replacement and upgrade project at an aluminum smelter in Qinghai started production, contributing to the growth momentum of aluminum operating capacity in the future.

Production Forecast: Entering March 2025, the operating capacity of domestic aluminum is expected to rise again as related enterprises activate and reach full production. By the end of March, the annualized operating capacity of domestic aluminum is expected to remain stable at 43.84 million mt/year. With the arrival of the "Golden March and Silver April" period, downstream operating rates are expected to rebound, and the new PV policies may stimulate a rush for installations in China, potentially driving growth in downstream demand for aluminum. The proportion of liquid aluminum is expected to rise again to around 74% in March. Further attention is needed on the resumption of aluminum capacity in various regions and the operating conditions of downstream sectors such as aluminum billet production.

Data Source: SMM

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