Multiple Aluminum Plants Cut Production Within the Month, Weakening Demand May Lead to a Continued Pullback in Liquid Aluminum Ratio [SMM Data]

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SMM, December 29: According to SMM statistics, domestic aluminum production in December 2024 (31 days) increased by 4.13% YoY, while cumulative production from January to December 2024 rose by 3.89% YoY. In December, several aluminum smelters in Sichuan and Guangxi reduced production. Specifically, in Sichuan, production cuts were mainly due to high alumina and electricity costs, leading to significant losses for enterprises. In Guangxi, some smelters reduced production due to technological transformation, with plans to resume production in Q4 2025. During the month, the resumption of production in Sichuan, Guizhou, and other regions stalled, primarily due to high alumina prices and the onset of the off-season, which weakened aluminum demand and prices, leaving enterprises with insufficient motivation to resume production. Meanwhile, projects in Xinjiang, Inner Mongolia, and Ningxia proceeded as planned. Throughout the month, the proportion of casting ingots increased in many regions, while the proportion of liquid aluminum decreased by 1.22 percentage points MoM and declined by 1.99% YoY. Based on SMM's liquid aluminum proportion data, domestic aluminum casting ingot production in December increased by 8.23% YoY to approximately 1.03 million mt.

Capacity Changes: As of the end of December, SMM statistics show that domestic aluminum existing capacity was approximately 45.71 million mt, while operating capacity was around 43.53 million mt, with the industry's operating rate up 2.49 percentage points YoY to 95.38%. Currently, domestic aluminum smelters are experiencing both increases and decreases in operating capacity. The increase mainly comes from the ramp-up of a new project at an aluminum smelter in Xinjiang, while the decrease is primarily due to production cuts at multiple smelters in Sichuan caused by losses and at some smelters in Guangxi due to technological transformation. Additionally, a capacity replacement project at an aluminum smelter in Inner Mongolia is proceeding as planned and is expected to be completed within the year, while a quota replacement project in Ningxia has already been completed.

Production Forecast: Entering January 2025, domestic aluminum operating capacity is expected to remain stable, with the negative impact of earlier production cuts on output becoming more pronounced. SMM has learned that no additional enterprises currently plan to cut production. By the end of December, the annualized domestic aluminum operating capacity remained steady at 43.53 million mt/year. As the Chinese New Year holiday approaches, downstream demand is weakening, and some billet plants are reducing production. The proportion of liquid aluminum is expected to further decline to around 70% in January. Moving forward, attention should be paid to changes in aluminum capacity across various regions and the operating conditions of downstream sectors such as aluminum billets.

Data Source: SMM

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