Chinese aluminum production increases by 7.5% in January-February, demand improves

BEIJING, March 15 (Reuters) – China’s aluminum output rose 7.5% in the first two months of 2023, official data showed on Wednesday, after tight COVID-19 restrictions ended. improved the economic outlook and raised demand expectations.

Primary aluminum production in China, the world’s largest producer of the metal, reached 6.74 million tonnes in January-February, up from 6.33 million tonnes in the same period a year earlier, according to Bureau data. . .

This is the highest two-month production since at least 2015.

China’s lifting of COVID-19 restrictions late last year, along with a series of measures aimed at strengthening its economy and real estate sector, raised hopes of an increase in the domestic demand for aluminum, which is used in construction, transportation and packaging.

Improved sentiment pushed the benchmark aluminum contract on the London Metal Exchange to a seven-month high of $2,658.50 a tonne on January 25.

Favorable market conditions, amid rising domestic prices, have also boosted producers’ willingness to operate, according to market agents.

Mysteel estimated the industry’s average profit at 1,063 yuan ($154.48) per ton in January and 1,670 yuan per ton in February.

However, the growth of aluminum production could be constrained by the country’s electricity supply.

In late February, China’s southwest Yunnan Province asked its local aluminum producers to further reduce energy consumption due to power shortages.

“The tight electricity supply in Yunnan is likely to limit supply,” said Liu Xiaolei, aluminum analyst at Shanghai Metals Market, who expects primary aluminum production from China is up about 3% this year.

Weakening consumption in Europe and the United States will negatively affect China’s aluminum product exports, reducing demand for primary aluminum, he added.

The production of 10 non-ferrous metals (copper, aluminum, lead, zinc and nickel) increased by 9.8%, reaching 11.92 million tons, in January and February, compared to the previous year.

Other non-ferrous metals are tin, antimony, mercury, magnesium and titanium.

Total non-ferrous metal output was also the highest for a January-February period since at least 2015, the data showed.

(1 US dollar = 6.8810 Chinese yuan renminbi)

(Reporting by Siyi Liu and Dominique Patton; editing by Neil Fullick and Jamie Freed;