China’s primary aluminium output in Sept. 2022 grows 9% YoY but falls 2.5% MoM due to fresh power restrictions in Yunnan

According to the National Bureau of Statistics, China’s primary aluminium production rose 9.3 per cent year-on-year in September 2022 to stand at 3.42 million tonnes, as smelters in a few major regions ramped up output after the ease of power restrictions.

Last year, China saw a drop in aluminium production as several regions imposed power curbs on energy-intensive industries like aluminium production due to electricity shortages. Even smelting hubs like Yunnan and Inner Mongolia had to order restrictions to meet energy consumption targets.

This year, despite a year-on-year increase, September output still dropped from the previous month by 2.5 per cent from 3.51 million tonnes, especially because Yunnan asked its aluminium producers to cut power usage from September 10 for indefinite time due to tight hydropower supply. This decision is likely to lead to an annual loss of about 1.07 million tonnes in Yunnan’s operating capacity, which accounts for nearly 12 per cent of China’s aluminium capacity, according to SMM.

Supply uncertainty due to fresh production cut, combined with weak demand outlook amid gloomy economy, incurs possible pressure on future metal price. In September 2022, the most-traded November aluminium contract listed on the SHFE averaged RMB 18,280 per tonne, slightly up from an average of RMB 18,185 per tonne in August.

China’s total production of primary aluminium during the first nine months of 2022 stood at 29.88 million tonnes, up by 2.8 per cent from the corresponding period last year.