China’s aluminum production rebounded in December to its highest since June, reversing five months of declines, as state-owned Chinalco launched new capacity even as Beijing curbed its private rivals, lifting 2017 output to a record.
The world’s top aluminum producer churned out 2.71 million tonnes of the metal last month, up 15.3 percent from 2.35 million tonnes in November, although it was down 1.8 percent from a year ago, the National Bureau of Statistics (NBS) reported on Thursday.
For the full year, China produced 32.27 million tonnes of aluminum, a rise of 1.6 percent from 2016, the data showed.
November output fell 7.8 percent from October as production cuts of as much as 30 percent at some Chinese aluminum smelters began kicking in fully by the middle of the month as part of a government crackdown on air pollution.
December’s monthly jump reflects the start up late last year of new smelting capacity in Inner Mongolia by Aluminum Corp of China (Chinalco) and in the southern province of Guangxi, regions that were not required to cut capacity under the pollution crackdown, analysts said.
Paul Adkins, managing director of consultancy AZ China, said 357,000 tonnes of annual smelting capacity came on line last month. He also pointed out that December has one more day than November, which means 3 percent, or 87,000 tonnes, more metal production.
The data will likely stir the debate about the government’s years-long push to get rid of excess capacity, and could raise tensions with rival producers, like the United States and Europe, which accuse China of exporting its unwanted metal onto the international market.
AZ China’s own estimate for China’s December production is 2.975 million tonnes, 10 percent higher than the official NBS number, and 36 million tonnes for the year. Many analysts consider the NBS data to be conservative.
CLSA’s Victor You estimates another 3.6 million tonnes of new aluminum smelting capacity could come on stream in China in 2018, equivalent to over 11 percent of last year’s production.
China’s overall non-ferrous metals output — including copper, aluminum, lead, zinc and nickel — rose to 4.72 million tonnes in December, up 9.3 percent from 4.32 million tonnes in November, to the highest level since June and up 2.8 percent from a year earlier.
Full-year nonferrous production stood at 53.78 million tonnes, up 3 percent from 2016, to set a new annual record. – Reuters