① In September 2023, there were rumors that aluminium smelters in Yunnan may face output cuts. However, ample water supply from major hydropower stations and abundant supply of thermal and new energy power allowed aluminium producers to maintain stable operation. Three aluminium producers basically resumed operation and were operating at full capacity in August, while the other one has not yet resumed large-scale production. By the end of September, aluminium operating capacity in the province had reached around 5.65 million mt.
② On October 27, 2023, according to SMM research, relevant departments of Yunnan Province and aluminium-related departments jointly met to discuss the power consumption of the industry during the dry season. Sources revealed that aluminium smelters in the province may reduce capacity by 22% in view of the industrial electricity demand next year and long dry season. How much production to be cut by each aluminium plant will be confirmed in the following week.
③On October 30, 2023, SMM learned that the proportion of aluminium production reduction in Yunnan has been basically determined. The four aluminium smelters will reduce capacity by 9%-40%, and some may lower productions soon. The total capacity reduction is estimated to be 1.15 million mt.
Aluminium output in Yunnan reached 3.09 million mt in January-September, down 3.1% YoY. As of now, the total operating capacity of aluminium is over 5.65 million mt, with an average daily output of about 15,000 mt. If this production reduction is implemented quickly according to news ③, the daily output will drop to around 12,000 mt. In the fourth quarter, aluminium output in China may be about 10.67 million mt, down 0.37% QoQ. In a word, the implementation of production reduction in Yunnan will exert impact on domestic aluminium supply in the first half of 2024.
