China’s alumina output drifts 1.5% higher Y-o-Y in July citing mixed production traits in August

According to SMM data, China's metallurgical-grade alumina output during July was 6.869 million tonnes, with a daily production average of 222,000 tonnes, a surge attributed to the phased release of newly added capacity and the conclusion of maintenance in several Guangxi region companies, leading to a gradual resumption of production and an uptick in daily production.

Year-on-year data reveals a 1.5 per cent increase in alumina production this July relative to the same period last year, primarily due to the input from newly commissioned alumina production capacities. As of the end of July, China's built alumina capacity reached a volume of 100 million tonnes, with an operational capacity of 81.08 million tonnes, culminating in a nationwide utilization rate of 81.1 per cent.

In Shanxi province, the operation rate was recorded at 68.8 per cent, marking a slight increase of 0.4 per cent over the previous month due to the constrained supply of domestically-sourced ores. In Henan, particularly the Sanmenxia region, production of domestic ores has been suspended due to land reclamation policies, with no immediate prospects for resumption, and some companies reported that the procurement of ores from the proximate Shanxi province is unlikely, given concerns over ore quality. The operation rate remained low at 64 per cent in July, albeit a modest rise of 0.7 per cent from the previous month.

In Guizhou, certain alumina refineries underwent scheduled maintenance in July, but the operation rate for the province held steady at 84.5 per cent, consistent with the previous month. In Hebei, the operation rate for July reached 93.1 per cent, up by 2.5 per cent from the previous month due to the increased output from newly commissioned capacities in the region.

In Guangxi, the operation rate climbed from 86.2 per cent in the previous month to 88.6 per cent, largely attributed to the resumption of production by certain companies following their maintenance period in July. Lastly, Shandong province reported an operation rate of 94.1 per cent, marking a notable increase of 3.7 per cent from the previous month due to the consistent rise in output from new capacities in the region.

For August, it is anticipated that the new capacities in Hebei will gradually ramp up to reach full production, while Henan may continue to curb production due to issues related to ores and production costs. In Shanxi, the continuous rebound in spot prices has increased the willingness of companies to boost production, but downstream aluminium smelters may adopt a wait-and-see approach, leading to a weakening spot transaction.

In Guangxi and Guizhou, the resumption of production in southwestern aluminium smelters has stimulated a recovery in demand. However, considering the constraints in ore extraction faced by individual companies in the southwest, flexible production is anticipated to predominate. SMM estimates an average daily production of 224,000 tonnes in August, with a total operational capacity of approximately 81.73 million tonnes each year.

Sourced from Shanghai Metal Market (SMM)