China’s primary aluminium output in June fell for a second straight month, official data showed on Thursday, as limits on power consumption in the smelting hub of Yunnan reined in supply.
The world’s top producer of the metal churned out 3.29 million tonnes in June, the National Bureau of Statistics said. That was down from May’s 3.32 million tonnes, but up 9.3% year on year.
First-half aluminium output rose to a record 19.64 million tonnes, up 10.1% from a year earlier, as smelters were encouraged by a surge in aluminium prices SAFcv1 to decade highs well above break-even levels.
Yunnan, home to about a tenth of China’s aluminium capacity thanks to abundant hydropower resources, ordered smelters to reduce energy consumption in late May after severe drought hampered electricity generation.
Although the drought situation subsequently eased, enabling the curbs to be gradually lifted, the southwestern province this week re-imposed power restrictions on zinc and tin producers.
“The lack of water in Yunnan has hit June’s number,” said Paul Adkins, managing director of the Zibo-based aluminium consultancy AZ China said. “But AZ China does not expect the water shortage to affect Q3 production numbers, as those pots are now back to full speed, or on their way back.”
Low inventory amid reduced production has supported aluminium prices, despite pressure from China’s State Council and the release of metal from strategic reserves, Adkins said.
He expects annual aluminium production in 2021 to test the 40 million tonnes level as additional smelting capacity is due to enter the market in the fourth quarter.
Output of 10 nonferrous metals – including copper, aluminium, lead, zinc and nickel – was 5.49 million tonnes in June, the NBS said.
That was up from 5.45 million tonnes in May to the highest monthly total since December, and up 8% year-on-year.
First-half production for this group – which also includes tin, antimony, mercury, magnesium and titanium – was up 11% year-on-year at 32.55 million tonnes.
Source: Reuters (Reporting by Shivani Singh in Beijing and Tom Daly; Additional reporting by Mai Nguyen in Hanoi; Editing by Kirsten Donovan, Kim Coghill and Richard Pullin)