Primary aluminium production in China records 2.4% growth even amidst Coronavirus outbreak: NBS

According to the National Bureau of Statistics, aluminium production in China during January-February 2020 increased 2.4 per cent year-on-year to come in at 5.85 million tonnes.

The bureau has revealed no separate production figure for January and February due to the extended holiday for Coronavirus outbreak followed after a week-long Lunar New Year holiday.

Reuters calculations found that the combined average production during January and February stood at 97,500 tonnes a day, down from 98,000 tonnes a day in December, the third-highest daily rate on record.

“The point is that metal has continued to come out at about the same rate and probably even rose a little in February … but demand has collapsed,” said Paul Adkins, managing director of consultancy AZ China.

Unlike factories that process primary aluminium into products, primary aluminium smelters could not remain close for long and restarted in a matter of weeks, which was why operating rates remained stable. What fell was the demand for aluminium among downstream consumers, resulting in the rise of Shanghai Futures Exchange aluminium inventories more than double to above 500,000 tonnes. Adkins estimates another 300,000 tonnes of primary aluminium is sitting at smelters, undelivered to markets.

Adkins also mentioned that the first 150,000 tonnes phase of Yunnan Shenhuo’s smelter started up at the end of 2019 and now ramped up the production. Further capacity is likely to be commissioned this month, added Adkins.

“We calculate the average cost of production in the range of 13,100-13,200 yuan a tonne, so there’s almost a 500 yuan deficit,” said Adkins, who said the big question now is whether smelters decide to shut down production.