China Aluminum Output at Record in January on Capacity Additions
Stock Chart for Aluminum Corp of China Ltd (2600)
Aluminum production in China, the biggest producer and user, climbed to a record in January on capacity additions, data from the National Bureau of Statistics showed today.
Production was 1.78 million metric tons in January, according to Bloomberg calculations based on the data. The figure exceeded the previous record of 1.75 million tons in August, said Zhang Chenguang, an analyst at SMM Information & Technology Co. The bureau doesn’t release January output data alone and may revise previous data without disclosure.
Rising output will probably weigh on prices and force higher-cost smelters to cut output, affecting their earnings. Inventories tallied by the Shanghai Futures Exchange expanded to 492,267 tons last week, the highest since November 2010, as those in major trading hubs climbed to a record in February.
“The additions of new capacity far exceeded the output cuts,” said SMM’s Zhang from Shanghai. “We’ll probably see further output constraints later this year.”
Output in the first two months jumped 15 percent from a year ago to 3.51 million tons, while February output was 1.73 million tons, the bureau said in an e-mailed statement.
China Power Investment Corp., the nation’s second-largest producer, will eliminate 200,000 tons to 300,000 tons of obsolete capacity, and has no plan to add more, President Lu Qizhou said on March 6. Aluminum Corp. of China Ltd., or Chalco, said in January it will report a “substantial” loss for 2012 on falling prices.
Aluminum for delivery in three months on the London Metal Exchange has declined 12 percent in the past year to $1,953.75 a ton at 1:39 p.m. in Shanghai. The contract for June delivery on the Shanghai Futures Exchange was at 14,875 yuan ($2,391) a ton.
“Our own survey showed 451,000 tons of output capacity closed due to losses, and smelters are considering shutting another 500,000 tons if prices remain low,” Zhang said.
Aluminum demand in China is expected to rise 8.6 percent this year to 23.35 million tons, while output may grow 9.8 percent to 24 million tons, Yao Xizhi, an analyst at Beijing Antaike Information Development Co., said in January.
Production of aluminum products gained 16 percent from a year ago to 4.65 million tons in January-February, while alumina output grew 15 percent to 6.81 million tons in the period, data from the statistics bureau showed.
Companies have delayed new projects as prices are below a break-even level of 16,000 yuan a ton, and there may be “large- scale” output cuts if prices stay low, Zhang Xuexin, chairman of Xinfa Group, said on March 8.
Copper output in the first two months this year rose 12 percent to 975,000 tons, and production in February was 483,000 tons, according to the bureau.
NOTE: Percentage changes are provided by the National Bureau of Statistics and have been based on year-earlier figures that may have been revised and not disclosed by the agency.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai at email@example.com