China’s aluminium output at 15 month high, experts fear pressure on price

<p>According to a Reuter&rsquo;s report, China&rsquo;s aluminium production surged in September after a drop in July/August. This is the highest stock reported in last fifteen months as the producers restarted new and idled capacities after seeing a rise in LME and SME prices.&nbsp; Experts fear that this might again disrupt the stability in prices.<br /><br />China accounts for more than half of world aluminium output and it produced 2.75 million metric tons of aluminium in September which is 1.2 per cent higher than a year ago and a third monthly increase. It was confirmed by the statistics bureau on Wednesday.<br /><br />According to International Aluminium Institute data, it would also be the biggest volume since June 2015. A number of smelters closed shutters at the end of 2015 as they were running unprofitable. They have returned to production to cash in on the price rally. As a result new low-cost capacity is also being brought online.<br /><br /><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/aluminum_ingots_550.jpg" alt="News" width="480" height="420" /><br /><br />The price of aluminium rose 15 per cent on the Shanghai Futures Exchange through the first nine months.&nbsp; Banks including Citigroup Inc. and Deutsche Bank AG have also warned of a retreat as aluminium output starts gaining.<br /><br />&ldquo;The smelters are coming back in a rush now, so that&rsquo;s a concern,&rdquo; said Paul Adkins, managing director of aluminium consultancy AZ China Ltd. &ldquo;For the rest of this year, two million tons of annual capacity is guaranteed to come in and guaranteed not to exit.&rdquo; That&rsquo;s &ldquo;going to put a lot of pressure on prices when we get to November or December onwards,&rdquo; he said.<br /><br />&nbsp;{googleAdsense}<br /><br />As a result of quickly growing demand in China, production of basic metals like aluminium and steel has increased this year.&nbsp; The government is also on a credit splurge to prevent economic slowdown, and survive the markets from multi-year lows. However, the YTD&nbsp; aluminium output&nbsp; for China in 2016 remains lower than a year earlier, down 1.4 per cent to 23.44 million tons.</p>