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China's aluminium output surged in August, reaching the highest monthly levels since 2002, driven by strong prices and steady profits. The National Bureau of Statistics reported a 2.5% year-on-year increase to 3.73 million metric tons. Despite prices softening from a two-year high in May due to demand concerns, smelters in regions like Yunnan continued production, supported by an ample hydropower supply. For the first eight months of 2024, output grew by 5.1% year-on-year. While industry profits are expected to decline, they remain sufficient to keep production robust in the near term.

Key Highlights

* China’s aluminium output in August reached a 22-year high.

* Monthly production hit 3.73 million metric tons, up 2.5% YoY.

* Aluminium prices peaked in May, boosting smelters’ profits.

* Concerns over weakening demand have led to price drops.

* Yunnan smelters maintained strong production due to hydropower.

China's aluminium output reached its highest level in over two decades this August, with production climbing to 3.73 million metric tons. The 2.5% year-on-year rise marks the strongest monthly output since 2002, according to data from the National Bureau of Statistics (NBS). Smelters were driven by the prospects of steady profits and stronger aluminium prices, which rallied to a two-year high in May.

However, the boost in production came despite a gradual decline in prices, which began falling due to weakened demand from both domestic and global markets. Concerns over slowing manufacturing activities in China and the United States, coupled with increased domestic supply, have put pressure on aluminium prices. The average price in August dropped to 2,121 yuan ($299.03) per metric ton, still considered a level that supports profitable production, particularly in regions with low-cost energy sources.

In Yunnan, one of China's primary aluminium-producing regions, smelters capitalized on abundant hydropower availability to keep operations running at a high capacity. For the first eight months of the year, China's aluminium production reached 28.91 million metric tons, a 5.1% increase compared to the same period in 2023.

While prices may continue to soften as demand falters, China's aluminium industry remains supported by sufficient profit margins, particularly in provinces benefiting from stable energy supplies. Industry experts forecast that production levels will likely remain elevated in the short term despite fluctuating prices.

Finally

China’s aluminium production remains robust, supported by profit margins and regional energy supplies, despite softening demand and declining prices.

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