According to the International Aluminium Institute’s latest figures, aluminium production in China slipped to 2,724Kt in July, but still accounted for 55% of total monthly world outputs. The daily rate of production decreased to 88kt from 92kt, shrinking by 4% m/m. Actually, announcements of plans to shut capacity mostly came late in July, so we estimate production will go down further in the coming months, at least until more of the big new capacity in the Northwest is released.
Overall, China still needs a lot more capacity to exit the market, and this slip in the July number is not enough to warrant too much hope that things will change. China aluminium production is still too strong for the level of demand.
For the world production of ex- China, July reached 2,196kt, increasing by 2% m/m. In addition, the y-o-y growth also remained positive at the level of 1.3%. However, as our chart shows, the rate of growth is trending down, even those it is still in positive territory.
This mainly resulted from cuts in America, and more seriously in South America. In contrast, outputs in Asia (ex China), the Middle East (GCC in the chart) and Europe all sustained positive growth in constant months.
For Asia, since year start, the y-o-y growth is still at the level of 20%. To date, monthly production already recovered to 247kt, with expansions of capacity in Malaysia and India.
If you are a subscriber to our Pipeline Report, you surely found the new page of ROW detail, in which you can clearly find that the expansion plans in next three years could add a lot more capacity – a point that cannot be ignored.