Chinese aluminum production unstoppable

In the wake of the strong week's start on the metal markets and recent news about another allegedly highly effective vaccine against Covid-19, it was lost that China produced a record amount of aluminum in October. According to the National Bureau of Statistics (NBS), aluminum production increased by 9.7% year-on-year to 3.2 million tons or 106.7 thousand tons per day. The Chinese smelters apparently took advantage of the high prices and produced as much aluminum as possible. To this end, they have also commissioned new capacities. A Chinese consulting firm estimates that in October alone almost 250 thousand tons per year were added. Another Chinese market observer puts the newly commissioned capacities since the beginning of the year at 1.96 million tons p.a. After ten months, the Chinese smelters are clearly on track to produce a record amount of aluminum for the year as a whole.

The production cutbacks during the winter season, which were ordered in recent years for environmental reasons, will not be implemented this time. This is because most smelters have upgraded their facilities to meet the new emission standards and will therefore not have to cut production. However, market participants continue to ignore the high production and the associated surpluses and use financial transactions to drive up the price of aluminum. Yesterday it reached a 2-year high of almost USD 1,960 per tonne. The Chinese steelworks have also upgraded. According to NBS data, China produced less than 3 million tons of steel per day for the first time in five months, but production was 12.7% higher than in the previous year. In the case of steel, it is virtually certain that China will pass the 1 billion tonne mark for the first time this year.

Source: Commerzbank Research, Photo: Fotolia