China alumina production to rise supported by domestic demand

As per preliminary production data released by Shanghai Metals Market in their latest survey report, China's alumina output in December rose 17.4 per cent year-over-year to total at 5471 thousand tonnes. This was higher by 4.28 per cent from the November output volume of 5246 thousand tonnes. The month-on-month rise in production signifies that demand for the mineral in domestic market has grown at a sustained rate.

Alumina production in China during January-December period increased 4.05 per cent from the previous year to reach 58710 thousand tonnes. This proves that though there were announcements of smelter owners curbing their aluminium output in 2016, the effect has been minimal on alumina supply side.

In January 2017, China is estimated to produce 5511 thousand tonnes of alumina, up 0.73 per cent from December. With outlook for domestic alumina demand remaining positive, major producers are expected to scale up production to leverage on the high prices.

Alumina witnessed a steep price rally in the fourth quarter of 2016 after a number of smelter owners in China resorted to commodity restocking for increasing their metal output. Though negotiations for 2017 alumina contracts have been delayed, they are expected to pick up as fresh demand arises from China domestic market.

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SMM surveyed major producers in China’s base metal market to get first-hand production data, and the study revealed a clear uptick in production of aluminium. In January 2017, aluminium production in China is estimated to rise to 2967 thousand tonnes from 2950 thousand tonnes in December. So, the increase in alumina output seems to be in perfect correlation with the end metal output.  

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