According to data from the National Bureau of Statistics (NBS), in June, China's primary aluminium production soared to its highest level in nearly a decade. The first half of the year (H1) saw a 7 per cent increase as producers boosted output amid rising profits.
China, a dominant force in the global aluminium market, has once again demonstrated its leadership. The country, which holds the title of the world's leading aluminium producer, churned out a staggering 3.67 million tonnes of primary aluminium in June. This marked a 6.2 per cent year-on-year surge and set a new record for the highest monthly production since November 2014, according to Reuters data.
According to a report by Shanghai Metals Market, last month, China's northern region of Inner Mongolia expanded its capacity, and the southwestern province of Yunnan resumed most of its production due to an ample hydropower supply during the summer rainy season.
H1 2024
This led to a total production of 21.55 million tonnes in the first half of the year, a 6.9 per cent increase from the same period last year, as reported by the NBS. Higher profit margins in the industry drove the growth, thanks to a surge in aluminium prices fuelled by investor optimism about light metal demand and increased investment in the base metals sector.
In late May, the most-traded aluminium contract SAFcv1 on the Shanghai Futures Exchange (SHFE) reached a two-year high of over 22,000 yuan ($3,030.39) per tonne, marking a 15 per cent increase since the beginning of the year.
The contract is currently hovering around RMB 20,000 per tonne. The price surge, coupled with lower electricity costs, allowed the industry to enjoy an average profit margin of RMB 2,818 per tonne in the first half of this year, more than double the RMB 1,211 per tonne from a year earlier, according to research firm Antaike. However, the increased output has led to a build-up of inventory in China, where a prolonged property crisis and rising prices have dampened demand.
Aluminium, primarily used in construction, transportation, and packaging, saw its deliverable stocks in SHFE warehouses (AL-STX-SGH) accumulate over recent months, reaching a 15-month high on Friday. Production of ten non-ferrous metals, including copper, aluminium, lead, zinc, and nickel, increased by 7.5 per cent to 6.61 million tonnes compared to a year earlier. Year-to-date output rose by 7.1 per cent to 39 million tonnes. The other non-ferrous metals in this group are tin, antimony, mercury, magnesium, and titanium.
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