Experts say weak demand and trans-Pacific trade tensions are the culprits for the People’s Republic of China’s first net production drop in aluminium in a decade over the course of 2019.
According to numbers published by the National Bureau of Statistics (NBS) yesterday, China’s aluminium smelters combined to produce 35.04 million metric tons of aluminium last year, which was off by 0.9 percent from 2018’s record high production level.
Last year’s drop ended a ten-year streak of production increases that began following 2009’s drop from the prior year’s total. However, estimates published by the International Aluminum Institute contradict those findings, as they reflect a year-on-year rise for each year since 2001.
Contributing to the fall in production were unplanned outages at smelters operated by some of China’s biggest aluminium players. World leading smelter China Hongqiao Group was forced to curtail production in August due to regional flooding, while Xinfa Group endured an explosion at a plant in far-west China.
However, the elephant in the room is China’s economic slow-down, reversing the trend of unparalleled economic growth the Middle Kingdom has enjoyed for several years. Of note is the country’s first decline in aluminium consumption in three decades last year according to numbers published by Antaike in November.
Despite a full-year drop, production was up by 4.9 percent on the month in December due to a series of production restarts in the month. December’s production was 0.7 percent below the all-time high production total from a year before, but the increase was still good enough to classify the month as the second-best for production on record.
December saw nearly 1 million metric tons per annum of aluminium smelting capacity restart according to Beijing’s CM Group, boosting the per diem production average from 96,600 metric tons in November to 98,000 metric tons last month. Higher prices and completed repairs are both counted as the prime factors for the production restarts.
CM Group estimates that the current year will see an addition of 2 million metric tons of aluminium smelting capacity come back online in China.