China’s aluminium billet production to close the year higher at 15.06 MT; Remelting billet output to total at 1 MT

According to the survey conducted by the Shanghai Metals Market, the conversion margins of aluminium billet are standing high for a long. The inventory of billet is falling over the past seven weeks but is likely to enter a new round of accumulation, given the fall in shipments amid sluggish downstream purchases.

The production capacities are widely spread across China, most of which are concentrated in the central and northern regions. The total installed capacity of aluminium billet in China is about 26.57 million tonnes, located mostly in the top three provinces like Shandong (34.44%), Xinjiang (16.58%), and Inner Mongolia (11.84%).

SMM survey has also observed that China’s production capacity of aluminium billet is increasing year by year. Despite the large-scale production cuts and restrictions under the dual control policy of energy consumption, the output of aluminium billet grew over the year in 2021, with annual production expected to rise 9.76 per cent to 15.06 million tonnes.

The installed production capacity is also expected to increase 5.38 per cent year-on-year to around 28 million tonnes in 2021.

The production capacity of remelting billet is mostly distributed in east China, with total estimated installed capacity at 7.9 million tonnes. The top three provinces that house the capacities are Guangdong (20%), Henan (16%), and Shandong (15%).

The output of remelting billet accounted for about 18 per cent of the total billet production in 2020. In 2021, China is expected to produce 1 million tonnes of remelting billet, equal to ¼ of the total billet production from aluminium liquid.

The output of aluminium extrusion is also expected to increase. As the largest downstream sector of aluminium billet, the production of aluminium extrusion in 2020 increased 7.65 per cent, which in 2021 would be further rising by 4.55 per cent.

But amidst all the highs, the operating rate of downstream aluminium extrusion companies is estimated to drop. The exports of extrusion have already started decreasing in H2 2021, expected to be far lower this year than 2020.