Continued high global aluminium production due to China
by David Fleschen
The day before yesterday, the International Aluminium Institute (IAI) reported continued high aluminium production for May. According to this, 5.45 million tonnes of aluminium were produced worldwide (175.7 thousand tonnes on a daily basis). This was 0.7% more than in the previous year. The increase in production is solely attributable to China, where 1.6% more aluminium was produced than a year ago. There, the 100 thousand tonnes per day mark was again exceeded. The IAI assumes a higher production rate for China than the National Statistics Bureau. Projected over the year as a whole, Chinese production is thus on track to reach or even slightly exceed the record level of 2018. Production capacities have been and will continue to be built up in China. In addition, unprofitable smelters there are subsidised and thus kept artificially alive.
According to the analysis company Wood Mackenzie, 70% of China's producers have been under water at times in recent months. In the meantime the situation there has eased considerably, as the aluminium price on the SHFE is now only just below the 14,000 CNY per tonne mark, which is regarded as the average break-even point for Chinese smelters. In our opinion, however, this also means that the production cuts in China that were announced some time ago and which have mostly not yet been implemented will now no longer take place. Chinese producers will probably continue to try to sell the surplus material on the world market, even if this is proving somewhat more difficult at the moment due to weak foreign demand. Outside China, according to IAI data, 0.5% less aluminium was produced in May. The aluminium price, which has risen noticeably since mid-May, has apparently prevented a sharper decline in production.
Source: Commerzbank Research, Photo: Fotolia