China's aluminum output rebounds in November, defies weak prices
14 December 2018
China’s primary aluminum output rebounded in November after three straight months of decline, defying a fall in prices for the metal used in everything from construction to making cars.
Analysts were surprised by the climb, which came as smelters apparently ramped up output ahead of winter production curbs that kicked in around the middle of the month.
The world’s top aluminum maker produced 2.82 million tonnes of the material last month, data from the National Bureau of Statistics showed on Friday.
That was up 3.9 percent from 2.72 million tonnes in October and up 19.2 percent from November 2017, the bureau said.
On a daily basis, China produced 94,000 tonnes of aluminum last month, versus around 88,000 tonnes in October, according to Reuters calculations.
That was the highest daily rate since July, when the monthly total of 2.93 million tonnes matched the all-time high. November has one less day than October.
Shanghai aluminum prices fell by 2.8 percent over November and hit two-year lows, leaving smelters struggling to turn a profit in a well-supplied market.
“New capacity increases (probably) outpaced the capacity closures,” said Helen Lau, an analyst at Argonaut Securities in Hong Kong.
Lower prices for raw materials bauxite and alumina may also have been a factor, she added. “The cost pressure is lower and that also helps (smelters) to increase production.”
Paul Adkins, managing director of AZ China, said his consultancy’s own output numbers for November showed a 1.6-percent drop from October amid capacity closures.
State-run Aluminum Corp of China Ltd, known as Chalco, said on Nov. 30 that it was cutting 470,000 tonnes of annual capacity due to market conditions and environmental protection requirements.
China is waging a self-styled ‘war on pollution’ after years of breakneck economic growth.
Top producer China Hongqiao Group has been ordered to close up to 550,000 tonnes of annual smelting capacity for the winter heating season that started in mid-November, according to analyst calculations.
Over the first 11 months of 2018, China produced 31.45 million tonnes of aluminum, up 7.5 percent year-on-year and on course for record annual output, the NBS data showed.
Meanwhile, output of 10 nonferrous metals - including copper, aluminum, lead, zinc and nickel - came in at 4.71 million tonnes in November, up 4.2 percent from October and up 12.7 percent year-on-year.
On a daily basis, production came to 157,000 tonnes, the highest since June 2017.
January-November output was up 6.1 percent at 50.43 million tonnes. The other metals in the group are tin, antimony, mercury, magnesium and titanium.