China’s National Bureau of Statistics has announced that June’s production level was 1.59 million tonnes, making for a daily average output of 53,000 tonnes. This is a jump of 7% over May’s record production level, and puts China on target to meet or exceed our prediction of 18.5 million tonnes for the year.
This level of production has come about because of China’s high price on the metal, which is currently trading at close to RMB18000 per tonne (US$2780). At that level, most if not all of China’s smelters are running at a profit. (Contact us if you want more information about China’s true cost of aluminium – as opposed to the numbers that some analysts would have you believe.)
Despite new records being set for output of metal, Shanghai inventory levels are still well down on where they were just a few months ago. The Government’s actions on credit tightening have led to a lot of de-stocking in the supply chain, but the positive sign is that with inventory and demand where they are, the metal price is set to stay high, which is good news for producers.
One rider on all of this is that the NBS numbers are often incorrect – though so are most of the official numbers. NBS is usually lower than the real figure. We should have a more accurate number by the end of next week.