Global Aluminium Production (Dec.) - Capital Economics
Metals

Global Aluminium Production (Dec.)

Metals Data Response
Written by James O'Rourke
Cancel X

Global aluminium production grew again in December. After a stellar 2020, we suspect that China will continue to lead the way in dragging global aluminium output growth even higher in 2021.

China-led increase in global output to continue in 2021

  • Global aluminium production grew again in December. After a stellar 2020, we suspect that China will continue to lead the way in dragging global aluminium output growth even higher in 2021.
  • According to the International Aluminium Institute (IAI), global aluminium production climbed to just shy of 5.7m tonnes in December (see Table 1), from 5.5m tonnes in November. Daily aluminium production was largely unchanged, falling back 600 tonnes to 182,900 tonnes.
  • Aluminium production in China rose to a record high of close to 3.3 million tonnes, up by nearly 8% y/y in December (see Chart 1), marginally higher than the growth rate recorded in November. We expect output to continue growing throughout 2021, given that the price of ShFE aluminium has now more-than unwound its COVID-19 induced hit and regional premia have recovered. Indeed, in December alone 300,000 tonnes of production capacity were reportedly added in China.
  • Elsewhere, output declined in most regions, which probably reflects renewed weakness in domestic demand caused by virus containment measures. Nevertheless, we forecast that production in most regions will pick up in 2021, spurred on by a reasonably high LME aluminium price and a recovery in demand.
  • Meanwhile, output in New Zealand will be higher this year than previously expected, as Rio Tinto’s New Zealand Aluminium Smelter (NZAS, 2019 output around 350,000 tonnes) now looks set to continue operating until at least December 2024, having originally been scheduled to close in August 2021. The decision was reportedly as a result of an agreement over power prices, but possibly also reflects higher aluminium prices, which adds weight to our view that the market will be comfortably supplied this year.
  • In sum, aluminium output is likely to grow again in 2021, led by China, which should weigh on prices by year-end as demand growth in China eases back in H2 2021.

Chart 1: Aluminium Production (Dec. 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

Dec. (Th. Tonnes)

3,280

363

495

338

281

352

561

5,670

% y/y change

7.8

-1.4

-2.2

4.3

-4.4

-1.4

2.7

4.2

Jan.-Dec. (Th. Tonnes)

37,317

4,138

5,826

3,975

3,333

4,153

6,525

65,267

% y/y change

4.3

-5.8

3.0

4.4

-3.4

-0.1

2.0

2.5

Sources: International Aluminium Institute, Capital Economics


James O’Rourke, Commodities Economist, +44 (0)20 3927 9834, james.orourke@capitaleconomics.com