China’s primary aluminium production to grow 2.5%, while consumption to inch up 0.3% in 2020: Liang Xuan

China’s production of primary aluminium might grow much faster than consumption in 2020, said SMM senior aluminium analyst Liang Xuan at 2019 China Nonferrous Metals Industry Annual Meeting. Xuan also pointed that this could put pressure on aluminium prices in turn in the coming year.

Output of primary aluminium in China is expected to increase 2.5 per cent to 36.44 million tonnes in 2020, after shrinking 1.51 per cent this year, Liang told delegates at the meeting; while consumption is likely to grow, but a slower pace of 0.3 per cent to 36.19 million tonnes from a decline of 1.48 per cent in 2019.

With 1.99 million tonnes coming online in the first 10 months of the year, there was 40.69 million tonnes on an annualised basis of primary aluminium capacity built in China as of the end of October, and 35.1 million tonnes in operation.

Alumina capacity expands much faster, on the other hand, than the primary aluminium, with more than 10 million tonnes of projects in the pipeline in China, Liang pointed out. Alumina capacity is estimated to expand by 2.5 million tonnes in 2019 and 6.2 million tonnes in 2020.

The recovery of Hydro’s Alunorte refinery in Brazil and the commissioning of Emirates Global Aluminium’s Shaheen’s plant in the United Arab Emirates, meanwhile, led to a sharp oversupply of alumina worldwide. Alumina capacity expansion in Indonesia and the recovery of China’s Jiuquan Iron & Steel’s refinery in Jamaica will be the other major drivers of alumina production growth outside of China next year.

Prices of alumina in China have recorded a 14 per cent decline this year, with prices of prebaked anode slipping 11.5 per cent, as of now.

Alumina capacity expansion in China and technical upgrading, meanwhile, likely to maintain bauxite imports at a higher level in 2020, but the pace to be slower.