Molten aluminium ratio declines at Chinese aluminium smelters in December 2020: Know Why?

In December 2020, molten aluminium accounted for 66.6 per cent of China’s total aluminium production, found the Shanghai Metals Market. That was down by 1.17 percentage points from the previous month, owing to the increased proportion of ingot output at smelters in north China. The decline was most prominent in Henan, Inner Mongolia, and Ningxia.

In Henan Province, Henan Zhongfu and Dengdian Group did not produce aluminium ingot due to strict environmental inspections, while in the three other smelters like Henan Wanji, Jiaozuo Wanfang, and Yugang Longquan, the proportion of ingot increased from November.

Some smelters in Inner Mongolia also did not shy away from increasing aluminium ingot output due to weaker demand for molten aluminium from nearby regions. In south-west China, on the other hand, strong demand for molten aluminium from nearby downstream producers resulted in a slower increase in aluminium ingot production in smelters at Guangxi, Guizhou, and Yunnan.

According to SMM survey, output of molten aluminium will continue to decline in January and February compared with aluminium ingot production. The primary reasons are: 1) Weaker demand for molten aluminium from nearby aluminium processing enterprises will drive the rise of ingot production, 2) continuous decline in the processing fees of aluminium billets, rods and alloys, and spot premiums of aluminium ingots will give smelters incentives to increase the production of ingot, 3) proportion of aluminium ingot in North China and Southwest region is expected to increase in the short term.