SMM analysis on China June aluminium output and July forecast

According to SMM, China's aluminium output in June (30 days) was 3.553 million mt, up 5.56% YoY. In June, the capacity awaiting resumption in Yunnan was almost fully put into production, and part of the capacity in Huayun Phase Ⅲ in Inner Mongolia also reached full production. The operating capacity of domestic aluminium continued to rise in June. However, as downstream entered the traditional off-season, billet plants and other processing plants reduced production or underwent maintenance, resulting in the proportion of aluminum liquid not rebounding as expected but showing a downward trend instead. The proportion of aluminum liquid was around 71.85%, down 1.4 percentage points MoM and 0.1 percentage points YoY. Based on SMM aluminum liquid proportion data, the domestic aluminium ingot output in June increased by 6.41% YoY to around 1.0002 million mt.

Capacity changes: As of the end of June, SMM statistics showed that the installed capacity of domestic aluminium was about 45.362 million mt, and the operating capacity was about 43.248 million mt, with the industry's operating rate up 4.76 percentage points YoY to 95.34%. The newly installed capacity in June mainly came from the Huayun Phase Ⅲ project (170,000 mt/year) in Inner Mongolia. By the end of June, one-third of this project was put into operation, and the remaining capacity will gradually be commissioned and reach full production in July-August. In addition, the idled capacity in Yunnan was almost fully resumed, with only a few old plants not completing technical renovations, contributing to the domestic aluminium operating capacity in June.

Production forecast: Entering July, the domestic aluminium operating capacity will mainly continue to rise, mainly due to the gradual commissioning and full production of Huayun Phase Ⅲ project in Inner Mongolia and the gradual resumption of previously renovated projects in Sichuan. SMM expects the annualized operating capacity of domestic aluminium to increase by about 150,000 mt MoM to 43.4 million mt by the end of July, with a total production of about 3.68 million mt in July (31 days). Additionally, as the downstream entered the traditional off-season in June, the demand weakened, leading to reduced or halted production for technical renovations in billet plants, bringing increased ingot output in June. According to the SMM survey, the downstream showed no signs of significant demand recovery in July. It is expected that the proportion of aluminum liquid will only slightly rebound to around 72% in July. Future attention should be paid to the resumption of aluminium production in various regions and the operating conditions of downstream aluminum liquid processing plants such as billet plants.