According to the latest IAI data, China aluminium production in December fell to 2.5 million tonnes. Converting to a daily rate, it means that China aluminium production ran at 81,600 tonnes per day, compared to 89,100 tonnes per day in November.
Many people latched on to this number, including a speaker at last week’s Platts aluminium conference. But wait a minute, let’s just look a little closer at these numbers.
To achieve a drop of over 7,000 tonnes a day, it means that something like 2,800 pots must have closed for the entire month, assuming an average pot produces say 2.5 tonnes per day. Did we see anything like that number of closures in the run up to December?
And it percentage terms, it’s even more remarkable. On a daily basis, it represents a drop of about 9%, which is a greater % drop than even occurred in the depths of the global economic crisis. In fact,there are only two months in the last 15 years where China has recorded a greater % drop.
And when I turn to history, as shown in the feature chart, I see the answer. China aluminium production dropped in 4 of the last 5 years, and the rise in 2012 was by only a tiny amount. What’s more, it appears that some sort of catch-up occurs the following February. Remembering all this data is a daily rate, there should be no change according to the days in the month. If anything, February should show a decline as workers go on vacation for Chinese New Year.
Why does the data for China aluminium production drop each December? I don’t have any answers, though I do have some suspicions. I suspect production drops as political heat rises.
It’s a constant message in this blog - when it comes to Chinese data, don’t start from that point. First go back and check the data itself.
Production probably dropped, but I doubt it was by this much.
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