SMM Analysis Of China Aluminum Production In July And Forecast For August

According to SMM statistics, domestic aluminium production in July 2024 (31 days) was 3.683 million mt, up 3.22% YoY. In July, all aluminium smelters in Yunnan Province resumed full production, together with the contribution from new capacity in Inner Mongolia and the resumption of scattered capacity in Sichuan Province, domestic aluminium production maintained a MoM and YoY growth trend. However, amid the off-season, the reduction or maintenance of billet factories and other aluminum processing plants impacted the proportion of aluminum liquid, which fell again. The proportion of aluminum liquid decreased by 1.1 percentage points MoM and 1.9 percentage points YoY to around 70.76%. Based on SMM's aluminum liquid proportion data, the domestic aluminium ingot production in July increased by 6.41% YoY to around 1.0769 million mt.

Capacity Changes: As of the end of July, SMM statistics show that the domestic existing capacity of aluminium was about 45.36 million mt, and the domestic operating capacity of aluminium was about 43.42 million mt, with the industry operating rate up 2.41 percentage points YoY to 95.72%. In July, all aluminium smelters in Yunnan Province resumed full production, together with the new capacity in Inner Mongolia and the resumption of scattered capacity in Sichuan Province, contributing to the domestic operating capacity of aluminium.

Production Forecast: In August 2024, domestic operating capacity of aluminium is expected to continue to rise, mainly due to the full production of the third phase of the Huayun project in Inner Mongolia, and the gradual resumption of previously upgraded projects in Sichuan. SMM expects the annualized domestic operating capacity of aluminium to increase by about 100,000 mt MoM to 43.52 million mt by the end of August, with production in August (31 days) reaching around 3.691 million mt. With the traditional peak season approaching, together with the recent rapid correction in aluminium prices, downstream demand has slightly improved, which may drive the operating rate of intermediate products such as aluminum billet to rebound. It is expected that the proportion of aluminum liquid in August will rebound to around 73%. Further attention is needed on the resumption of aluminium production in various regions and the operating rates of downstream products such as aluminum billet.