Global Aluminium Production (Nov.) - Capital Economics
Metals

Global Aluminium Production (Nov.)

Metals Data Response
Written by Samuel Burman
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Global aluminium production held up well in November and, given the recent surge in prices, will almost certainly increase in the coming months.

China production boom will continue

  • Global aluminium production held up well in November and, given the recent surge in prices, will almost certainly increase in the coming months.
  • According to the International Aluminium Institute (IAI), global aluminium production fell to just under 5.5m tonnes in November (see Table 1), from 5.6m tonnes in October. That said, daily aluminium production rose to 182,400 tonnes, which is its second highest level on record. (November has 30 days.)
  • Aluminium production in China grew by 7.7% y/y in November (see Chart 1), which is a touch lower than the 8.5% recorded in October. Nevertheless, daily production rose m/m in China and, considering that the price of ShFE aluminium has surged in recent weeks, domestic output is likely to continue to edge higher in the coming weeks as smelters’ margins have increased. What’s more, an extra one million tonnes of new primary production capacity – much of which will be based in Yunnan using hydropower – is scheduled to come on stream in 2021, according to Antaike.
  • By contrast, daily production fell in most regions outside China, perhaps because of weak domestic demand associated with renewed virus-related lockdowns. We think that production in most regions will bounce back soon incentivised by the higher price.
  • A notable exception could be Russia. We suspect that output there could fall in early 2021 if sanctions are re-imposed on Russia’s top producer, Rusal. European officials have reportedly told the US government that Oleg Deripaska, the founder of Rusal, still retained significant control of the company despite agreeing to step down as part of a sanctions agreement (the so-called ‘Barker Plan’).
  • All told, global aluminium production looks set to rise next year, which would exaggerate the existing global market surplus and should put a ceiling on prices.

Chart 1: Aluminium Production (Nov. 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

Nov. (Th. Tonnes)

3,174

344

478

327

272

340

536

5,471

% y/y change

7.7

-3.6

-1.0

5.1

-3.5

-1.4

1.3

4.1

Jan.-Nov. (Th. Tonnes)

34,120

3,782

5,321

3,637

3,051

3,801

5,962

59,674

% y/y change

4.2

-6.1

3.4

4.4

-3.3

0.0

1.9

2.5

Sources: International Aluminium Institute, Capital Economics


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