China’s aluminium ingot supplies to grow in Q4 2018 on weaker demand and slow output cuts

Shanghai Metals Market believes that supplies of aluminium ingot in China may expand in the fourth quarter of 2018 as the demand would likely to remain sluggish. Production, on the other hand, grew month-on-month. In September, China produced 3 million tonnes of primary aluminium which in the next month increased to 3.114 million tonnes.

This imbalance between production and consumption led to losses for many aluminium producers and consequentially output cut. About 1.35 million tonnes of capacity has been cut so far this year. But new capacities are soon to come online, on the other hand. SMM estimates that more than 2 million tonnes of new capacity would come online across 18 producers by the end of the year.

Monthly operating primary aluminium capacity held relatively stable in July-October, at around 37.4 million tonnes, found SMM.

Ramp-up of aluminium ingot production due to sluggish sales of molten aluminium also contributed to the growth of aluminium ingot inflows to the market, learned SMM.

Consumption of downstream aluminium such as extrusions and flat-rolled products is estimated to remain sluggish as well, on lowered demand to continue across real estate, automobile and home appliances sectors in the last quarter of the year.

While SMM expects gains in aluminium ingot supplies in the fourth quarter, there is expected to be limited upside room with the potential for more capacity cuts.