China Powers Global Aluminum Output to Record High

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Hey there, aluminum enthusiasts! Rina Meng here, your go-to gal for all things aluminum-related. Today, I’ve got some exciting news for you. Brace yourselves because China is taking the world by storm with its jaw-dropping aluminum production. We’re talking record-breaking numbers, people! So, grab your favorite aluminum beverage can and settle in for this riveting update.

Picture this: it’s August, and the global production of primary aluminum is soaring to new heights. The world’s smelters are working their magic at an annualized rate of a whopping 71.2 million metric tons! That’s right, my friends, we’ve hit an all-time high! And guess what? This isn’t a one-time fluke. It’s the second consecutive month that we’ve surpassed the 70-million metric ton mark. The last time we did that was back in August 2022. Talk about a double whammy!

Now, let’s dive into the nitty-gritty. The International Aluminium Institute (IAI) has made some mind-boggling revisions to its production numbers. Brace yourselves for this bombshell: China, the heavyweight champ of aluminum production, is experiencing a production surge. How, you ask? Well, it seems like the improved power supply in previously drought-hit parts of China’s hydro-electric system is the secret sauce behind this aluminum extravaganza. It’s like Mother Nature decided to give China a helping hand, and boy, did it pay off!

But hold your horses, folks! We’ve got a burning question on our minds. Can Chinese demand keep up with this new wave of production? It’s a mystery waiting to be unraveled. We’re witnessing a marked increase in non-Chinese aluminum production too. The IAI has revised its estimates, adding a staggering 577,000 metric tons of annualized output to its “unreported” category. And get this, most of this increase is thanks to previously uncounted production in Malaysia and Iran. Those sneaky little devils!

Let’s not forget about China’s own production. It’s time for a reality check, people. The IAI had previously estimated that Chinese production took a hit, dropping by an annualized 118,000 metric tons in the first seven months of 2023. But guess what? They were wrong! National output actually rose by a jaw-dropping 1.3 million metric tons. Mind-blowing, right?

In August alone, global production reached a staggering 6.0 million metric tons, marking a 1.6% increase compared to the same month last year. And if we look at the cumulative production from January to August, we’re talking about a solid 46.5 million metric tons, up 1.7% from the same period last year. China is leading the pack with a growth rate of 2.5% during January to August, while the rest of the world is lagging behind with more modest growth of 0.5%. Looks like China is running the aluminum show!

But wait, there’s more! Chinese primary metal output faced some challenges earlier this year due to power curtailments in hydro-powered provinces like Yunnan and Sichuan. However, thanks to the rainy season in southern provinces, those energy-hungry smelters are now enjoying an improved electricity supply. Talk about a silver lining! Since March, China’s annualized run-rate has skyrocketed by a staggering 2.1 million metric tons, reaching a fresh all-time high of 42.4 million tons in August. We’re getting closer and closer to the 45-million-metric-ton level, which is the capacity cap placed on the sector several years ago. Will they break through that cap? Only time will tell!

Now, let’s talk about the demand side of the equation. Are Chinese consumers ready to gobble up this surplus of aluminum? Well, it seems like they’re stepping up to the plate. We haven’t seen any visible build-up of inventories registered with the Shanghai Futures Exchange (ShFE). In fact, exchange stocks are historically low, currently sitting at a mere 90,293 metric tons. Compare that to 210,000 metric tons of aluminum held in ShFE warehouses this time last year. It’s like the aluminum stocks are playing hide-and-seek!

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