As the world’s paramount aluminum producer, China’s production dynamics influence global markets, pricing, and supply chains. Let’s delve deep into China’s aluminum sector and understand its trajectory.
Last month alone, China ramped up its production to 3.58 million metric tons, a testament to its manufacturing prowess. A significant contribution came from the Yunnan province, which benefited from optimal hydropower supply. Interestingly, this surge contrasts sharply with the previous year, when low rainfall hampered production efforts, leading to a substantial reduction in capacity.
Demand, Stock, and Pricing:
Despite this rising tide of production, aluminum stocks are at a surprising low. With the demand, especially from the solar and other power sectors, remaining resilient, stocks on the Shanghai Futures Exchange dipped to their lowest since March 2019. This interplay between limited supply and robust demand catalyzed a surge in aluminum prices, culminating in a 15-month peak recently.
A deep dive into the numbers reveals that daily aluminum output for September stood at 119,333 tons. The total output for the first nine months of 2023 marked a 3.3% increase from 2022. Another intriguing trend is the spike in aluminum imports, driven predominantly by elevated domestic prices.
Role of Raw Materials:
Bauxite, the cornerstone for aluminum production, also witnessed significant import trends. Last month’s imports soared by 23.1% year-on-year, emphasizing the intrinsic connection between bauxite availability and aluminum production.
Peering into the crystal ball, experts like Su Yanbo from Aladdiny predict the monthly output to hover around the 3.5 to 3.6 million tons mark in the upcoming quarter. Even with a recent drop in rainfall in Yunnan, the ample water storage ensures steady production.
Wider Industry Context:
Zooming out, it’s not just aluminum. China’s entire non-ferrous metal sector is on an upswing, with September witnessing a record monthly output.
China’s aluminum industry is a dynamic ecosystem, an amalgamation of production spikes, raw material dependencies, and global demand. For stakeholders worldwide, keeping a keen eye on these trends is not just recommended—it’s imperative.