China’s domestic aluminium production sets a reserve tone at the beginning of 2023 on lower operating rate

According to the Shanghai Metals Market data, China’s domestic aluminium production in January 2023 (31 calendar days) recorded a marginal drop of 0.6 per cent month-on-month to 3.42 million tonnes. In December 2022 (31 calendar days), the domestic output had grown by 3 per cent M-o-M from 3.34 million tonnes to 3.44 million tonnes. On a year-on-year calculation, China’s January aluminium output edged a 6.7 per cent hike from 3.204 million tonnes.

China’s daily output of aluminium also registered a decline month-on-month in January 2023 from 110,900 tonnes to 110,300 tonnes. The drop in China’s monthly aluminium production could be attributed to a lower operating rate of about 310,000 tonnes from the end of December and 760,000 tonnes from November after three rounds of power curtailment. The domestic operating aluminium capacity was 40.3 million tonnes in January 2023.

But at the same time, a new capacity of 50,000 tonnes was resumed in Sichuan and Guangxi, and 120,000 tonnes was put into operation by Gansu Zhongrui, Guizhou Yuanhao and Mongolia Baiyinhua.

The proportion of aluminium liquid also fell by 7.2 percentage points month-on-month to 59.2 per cent amid the seasonal low and Chinese New Year holiday.

The resumption of new capacities brought China’s installed aluminium capacity to 45.26 million tonnes at the beginning of February 2023. However, the operating capacity is likely to decline in the said month to 40.1 million tonnes, given the expected 10-20% production cut in Yunnan and the slow operation resumption in Guizhou due to expanded hydropower shortage in southwest China.

The monthly production of domestic aluminium is estimated to grow in February 2023 (28 calendar days) by 4.1 per cent year-on-year to stand at around 3.07 million tonnes. But on a month-on-month basis, the output is projected to stand 10.23 per cent lower.