China's aluminum output soared to a new monthly high in June, propelled by capacity expansions in Inner Mongolia and the resumption of production in Yunnan province following significant summer rainfall. According to the National Bureau of Statistics, the nation produced 3.67 million tons of aluminum in June, a 6.2% year-on-year increase, establishing a new monthly record. For the first half of the year, production surged by 6.9% compared to the same period in 2023, reaching 21.55 million tons.
The restart of previously curtailed production in Yunnan was made possible by improved hydropower conditions, following heavy rains over the past few months.
China’s hydropower generation increased by 8.4% from January to April, benefiting provinces like Sichuan and Yunnan due to record rainfall in Guangdong.
Furthermore, capacity expansions in Inner Mongolia significantly boosted aluminum output, driven by higher aluminum prices. In late May, prices on the Shanghai Futures Exchange (SHFE) peaked at approximately 21,530 yuan ($2,970/ton), up from below 19,000 yuan in the first quarter. However, prices have since moderated to around 20,000 yuan.
Despite the increased production, demand in China has not kept pace, leading to a buildup in stock levels. Deliverable aluminum stocks in SHFE warehouses reached a 15-month high at the end of last week, reflecting the disparity between supply and demand. This rising inventory highlights ongoing challenges in balancing production with market needs.
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