China aluminium cuts exceed 2 mln tonnes so far, Antaike says

Credit: REUTERS/CHINA STRINGER NETWORK

By Tom Daly

Sept 2 (Reuters) - The amount of annual aluminium capacity shut down in top producer China so far this year has exceeded 2 million tonnes and could rise further, state-backed Chinese research house Antaike said on Thursday.

Several Chinese regions - including the smelting hubs of Yunnan, Xinjiang and Inner Mongolia - have imposed restrictions on aluminium makers' electricity consumption or metal production in recent months because of tight power supplies and pressure to reduce emissions.

Antaike analyst Shen Lingyan said on a webinar that these measures, plus some flooding in Henan, led to output cuts of 2.33 million tonnes of aluminium on an annual basis by August. That is equivalent to 5.9% of China's operational aluminium capacity of 39.67 million tonnes at the end of 2020.

Shen warned there was "risk of further expansion" of the curbs, possibly in Qinghai or Shaanxi provinces.

She sees China's primary aluminium output nonetheless rising by 5.1% to 39.2 million tonnes this year on smelter restarts and capacity additions, although she said both had progressed more slowly than planned.

Aluminium prices on the Shanghai Futures Exchange SAFcv1 hit a 13-year high this week on fears of tight supply, while benchmark London prices hit a fresh decade peak above $2,700 a tonne on Thursday. MET/L

Antaike has also revised its forecast for China's net primary aluminium imports this year to 1.1 million tonnes, up a whopping 57% from an earlier estimate in June and slightly higher than 2020's bumper inflows of 1.05 million tonnes.

China has over the last decade had little need for overseas aluminium but the spread between Shanghai and London prices LMESHFALc3 that makes imports favourable blew open last year as Chinese demand recovered fastest from the coronavirus outbreak. This arbitrage window is open again.

"It is expected that the Chinese electrolytic aluminium market will maintain the tight supply-demand balance pattern in the next five years," Shen said.

The table below shows aluminium capacity cuts recorded by Antaike.

Region

Company

Capacity shut as of Aug (T)

Month of shutdown

Inner Mongolia

Holingol Coal Hongjun

40,000

March

Inner Mongolia Jinlian

97,000

Jan-March

Chuanyuan Metal

70,000

March

Mengtai Aluminum

50,000

March

Baotou Aluminum

20,000

March

Baotou Rare Earth

10,000

March

Yunnan

Yunnan Aluminium

682,000

May

Yunnan Shenhuo

200,000

May

Yunnan Hongtai

40,000

May

Yunnan Qiya

22,000

May

Henan

Jiaozuo Wanfang

370,000

July

Dengfeng Aluminum Alloy

30,000

July

Guangxi

Guangxi Investment

150,000

July-Aug

Baise Mining

110,000

Aug

Xiangji

20,000

Aug

Guizhou

Huaren

100,000

June

Xinjiang

320,000

Aug

Total

2,331,000

COLUMN-China battles with aluminium's decarbonisation paradox: Andy Home

(Reporting by Tom Daly; editing by Barbara Lewis)

((tom.daly@thomsonreuters.com; +86 10 5669 2119;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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