Global Aluminium Production (Aug.) - Capital Economics
Metals

Global Aluminium Production (Aug.)

Metals Data Response
Written by Samuel Burman
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Global aluminium output remained strong in August. Production should rise in the coming months as new capacity comes on stream in China, which should act as a lid on prices.

China to continue to prop up global supply

  • Global aluminium output remained strong in August. Production should rise in the coming months as new capacity comes on stream in China, which should act as a lid on prices.
  • According to the International Aluminium Institute (IAI), global aluminium production held steady at around 5.5m tonnes in August, following an upwards revision to the July production estimates. Average daily output was still around 177,000 tonnes, which is 2.4% higher than this time last year. (See Chart 1.)
  • Even though the IAI estimates that production remained unchanged in China at 3.17m tonnes in August, nearly all of the growth in global production so far this year has occurred in China. (See Table 1.) This is in large part owing to higher prices in China relative to the rest of the world earlier this year. And while prices in China may soon fall relative to elsewhere, production in China will probably continue to grow in the months ahead. For one, a new 150,000 tonnes per year nameplate capacity smelter owned by the Henan Shenhuo Group has recently come on stream. What’s more, aluminium demand in China has been very strong recently. In fact, China became a net importer of aluminium products in July for the first time in a decade and ongoing fiscal support should provide a further tailwind for demand.
  • Aluminium production outside of China fell by 0.2% last month, primarily because of lower output in the GCC amid a shortage of alumina but weak demand is also a factor. We think that aluminium demand will remain weak in most regions outside of China, particularly now that virus infections are rising again in many countries, which suggests that production is unlikely to recover soon.
  • All told, new production capacity in China will exacerbate the current oversupply in the global market. This is one reason why we think that the price of aluminium will fluctuate around current levels for the remainder of this year.

Chart 1: Aluminium Production (Aug. 2020, % y/y)

Sources: International Aluminium Institute, Capital Economics

Table 1: Aluminium Production

 

China

Other Asia

GCC

N. America

W. Europe

E. & C. Europe

Others

World

Aug. (Th. Tonnes)

3,170

347

480

331

280

349

528

5,485

% y/y change

6.6

-7.2

-2.8

3.1

-2.1

-2.0

-3.8

2.4

Jan.-Aug. (Th. Tonnes)

24,552

2,738

3,888

2,659

2,229

2,772

4,199

43,037

% y/y change

2.7

-6.8

5.3

4.4

-3.5

0.6

-1.7

1.4

Sources: International Aluminium Institute, Capital Economics


Samuel Burman, Assistant Commodities Economist, samuel.burman@capitaleconomics.com