Chinese aluminum and steel production fell in July
by David Fleschen
According to data released by the National Bureau of Statistics (NBS) the day before yesterday, China produced 2.98 million tonnes of aluminum in July, nearly 2% more than in the previous year. This was the second highest monthly value of all time. On a daily basis, however, production was 3% below the record level of the previous month. This was mainly due to the temporary closure of a large smelter in northeastern China. In the first half of August, production is likely to have fallen further, as the typhoon "Lekima" in the east of the country has caused great damage. The typhoon affected Shandong, the largest production region of aluminum in China. But the aluminum price rose only slightly from its 2½-year low in the middle of last week and is currently trading at $ 1,790 a ton. In our view, the global aluminum market is well supplied, which is likely to stand in the way of significantly rising prices in the wake of economic concerns.
For Chinese steel production, a similar picture emerges. According to NBS data, 85.2 million tons of steel were produced in July, nearly 5% more than in the previous year. However, it was well below the level of the previous month, due to environmental measures by local governments and high raw material prices. The latter have contributed to making Chinese steelmakers less profitable. Now there are signs of a weakening demand for steel, for example in the real estate sector.
Source: Commerzbank Research, Photo: Fotolia