China's secondary cast aluminium alloy capacity to grow by 1.32 million tonnes this year, exacerbating market oversupply

According to the Shanghai Metals Market, there are currently 41 new and under-construction secondary aluminium projects in China, with a combined capacity of 4.63 million tonnes. Of this total capacity, 44.28% (2.05 million tonnes) is dedicated to secondary cast aluminium alloys across 28 planned projects, while the remaining capacity, 2.58 million tonnes, is allocated to secondary wrought aluminium alloys.

Image Source: CFS Foundry

Among 28 secondary cast aluminium alloy projects, 16 are expected to be operational by the end of 2024, adding 1.32 million tonnes to the total capacity. The pace of capacity expansion has slowed this year compared to 1.88 million tonnes of new operational capacities in 2023.

Most of the new capacity planned for this year is scheduled to commence in H2. Only 460,000 tonnes were lined up in H1, accounting for about 35 per cent of the new capacity.

Regions like Anhui, Sichuan, and Yunnan will have the maximum new capacities of 410,000 tonnes, 170,000 tonnes, and 150,000 tonnes, respectively, contributed by leading enterprises.

Although growing slower, the capacity expansion of secondary cast aluminium alloy is likely to exacerbate the industry’s oversupply, intensifying market competition. However, the domestic aluminium scrap supply is tight, with limited import scope due to upended domestic and international prices.  

The lean supply of aluminium scrap, on the other hand, has resulted in increased demand and prices of primary raw materials, reducing profits for secondary aluminium enterprises.