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China’s primary aluminum output in June climbed from a year earlier, according to data released on Monday, as smelters started to resume production in the southwestern Yunnan province after curbs on local power usage were eased.
The world’s top aluminum producer churned out 3.46 million metric tons of primary aluminum last month, up 2.9% from the year-ago period, data from the National Bureau of Statistics showed.
June’s data showed a daily output of 115,333 metric tons, up from 110,323 metric tons in the previous month, according to a Reuters calculation.
Yunnan, China’s fourth-biggest aluminum-producing region, began lifting curbs in power supplies to the industry late last month following more rains in the region, which relies heavily on hydropower.
Around 500,000 metric tons of annual capacity has been resumed since the start of the second quarter, but it will come to the market slowly due to a time lag associated with commissioning, according to Chen Xinlin, a senior consultant at Metals & Mining at Wood Mackenzie.
Smelters, which had cut production since last September due to the power curbs, have ramped up production amid high profits of as much as 4,000 yuan ($558.02) a metric ton.
Lower thermal coal and alumina prices last month made it cheaper to produce the energy-intensive metal, according to local information provider Mysteel.
The most-traded aluminum contract on the Shanghai Futures Exchange recorded a slight gain last month.
With supplies improving and demand remaining low, inventories of the metal used widely in transportation, construction and packaging sectors are expected to rise in the coming weeks. Aluminum stocks in SHFE warehouses increased last two weeks.
Although Yunnan smelters are expected to restart most of the curtailed capacity during the traditional rainy season in the third quarter, uncertainty remains as some southern cities prepare to deal with the power supply challenges seen this summer and look to improve coal-fired power generation to offset hydropower loss, Chen said.
Primary aluminum output totalled 20.16 million metric tons in the first half of this year, up 3.4% from the corresponding period in 2022.
China’s non-ferrous output stood at 6.15 million metric tons in June, up 6.1% year-on-year. Total output for the first half totalled 36.38 million metric tons, rising 8% from the same period last year.
($1 = 7.1682 Chinese yuan)
(By Siyi Liu and Dominique Patton; Editing by Muralikumar Anantharaman, Sherry Jacob-Phillips and Subhranshu Sahu)
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