China churned out 36.3 million tonnes of aluminium in 2017, up 14.4% YoY

SMM has published the latest output data from the major Chinese producers of alumina and aluminium along with other base metals and report shows an increase in aluminium production month on month despite the winter capacity cut.

SMM observes that despite the supply-side reform and winter cuts last year, recovered and newly-added capacity made up for the suspended capacity at Shandong Weiqiao, Shandong Xinfa, Xinjiang Xiwang, Xinjiang Jiarun and Inner Monglia Jinlian, keeping the output high in December. The following table shows the latest output for alumina and aluminium in December and a forecast for January.

According to the preliminary data for aluminium production for the month of December, the output stands at 3 million tonne; up 1.7% from December 2016 and up 3.2% from November 2017 output of 2.9 million tonnes. From January to December 2018, China churned out 36.3 million tonnes of aluminium, up 14.4% from last year. The country is forecasted to produce 3.04 million tonnes of aluminium in January 2018.

As updated by SMM, today’s average A00 ingot price in China increased from RMB 14,720 per tonne to RMB 14,910 per tonne, driven by yesterday’s rise in LME aluminium price.

As of late December 2017, domestic aluminium ingots inventory stood at 1.76 million tonnes, up 1.42 million tonnes YoY. The actual surplus was over 1.14 million tonnes considering those held up in Xinjiang. The operating capacity is expected to rise in January considering the newly-built capacity of Huaren, Hualei, Huarun, Gansu Zhongrui, Mengtai and Chuangyuan.

The numbers do not look very bright for aluminium price in China.  More output is expected to increase export of semi-finished products by China. However, considering the strict tariff rules adopted by the U.S. and Europe on the import of Chinese semi-finished products, it might have an effect on Chinese exports. A strong demand from the construction and manufacturing sector in China can only support any gain in primary aluminium price in China.