China’s daily average aluminium output hit record high in June, according to Reuters Calculations

According to Reuters’ calculations, China’s daily average aluminium output hit record levels in June and pegged at 99,000 tonnes, up from 96,000 tonnes in May and also higher than the previous record levels of around 98,400 tonnes in December 2018.

But despite an increase in daily production, the total production in the entire month of June totalled slightly lower than the previous month, according to the data from the National Bureau of Statistics.  The data shows that in June, China produced 2.97 million tonnes of aluminium, down 2.98 million tonnes in May but up 1.3 per cent year-on-year.

The hike in daily output followed a jump in Shanghai aluminium prices to as much as RMB 14,380 per tonne in May, resulting in positive margins for some smelters and incentivising ramp-ups. But in June, the price inched down by 2 per cent and currently hovers below RMB 14,000 per tonne, which is considered a break-even threshold for many Chinese smelters.

Jackie Wang, an aluminium analyst at CRU in Beijing, pointed out the alumina price has also been on the decline since the second half of June, easing the pressure on smelter margins.

She said local employment rate considerations might prevent closures being made at smelters if aluminium prices remain low. But there could be slower ramp-ups at the smelters due to the sluggish price trend, Wang added.

Meanwhile, June production of 10 nonferrous metals including copper, aluminium, lead, zinc, and nickel rose 3.4 per cent from May to 4.9 million tonnes, according to the Reuters calculations. Nonferrous output for the first half of 2019 was up 4.3% year-on-year at 28.34 million tonnes.