Singapore 15/04/2016 - China’s production of electrolytic aluminium rose 2.7 percent year-on-year to 2.62 million tonnes in March, according to data published by the country’s National Bureau of Statistics (NBS) on Friday.
This reverses the 7.7 percent year-on-year decline in January-February, where production was at 4.55 million tonnes in the two months. NBS does not report separate January and February output figures to avoid distortions from Chinese New Year holidays.
Chinese aluminium production totalled 7.34 million tonnes in the first quarter, down two percent from the same period last year.
Production stoppages in China’s aluminium industry had picked up speed in the second half of last year owing to low aluminium prices and overcapacity. But there are signs that some idled capacity are restarting after Chinese aluminium prices rebounded since late-November last year.
Analysts estimate that capacity that has already been or is planned to be restarted alongside new start-start-ups between early-January and early-March amount to around 500,000 tonnes per year of capacity.
But market participants said they are not overly worried about the restarts and start-up of new capacity in the first half of this year.
Analysts forecast that actual restarts and new capacity start-ups in the first half of the year will likely be around one million tonnes per year – a figure they said will be insufficient to meet demand especially during the Chinese peak demand period of April-May, resulting in tight supply in the first half.
The Shanghai Futures Exchange June contract has risen around 25 percent since hitting a low of 9,555 yuan per tonne in late-November. It was last at 11,975 yuan on Friday, up 15 yuan from Thursday’s close.
Meanwhile China’s output of ten major nonferrous metals, including aluminium, rose 4.4 percent year-on-year to 4.31 million tonnes in March, taking year-to-date production to12.06 million tonnes. This is down 0.4 percent from the first quarter of last year.
The latest figures improve from a 4.3-percent year-on-year decline to 7.61 million tonnes in January-February.
Chinese metals production has slowed since August last year, with December 2015 registering its first year-on-year decline since December 2010.
Additionally, overall industrial production in the country’s nonferrous metal smelting and fabricating industry had risen 8.9 percent year-on-year in March and 9.7 percent year-on-year in the first three months of the year.