BEIJING (Reuters) - China’s primary aluminum production climbed 12 percent in July from the same month a year earlier, equaling its monthly record, as new smelters took output back toward the level that preceded capacity closures in mid-2017.
The world’s biggest aluminum producer churned out 2.93 million tonnes of the metal last month, according to National Bureau of Statistics data released on Tuesday. That matched the previous high, set in June 2017, and was up 3.4 percent month-on-month.
On a daily basis, China produced 94,500 tonnes of primary aluminum last month, according to Reuters calculations based on the data. That was below the previous daily record of 97,700 tonnes, set in a 30-day month.
Last year, China’s aluminum output fell by 8.4 percent from June to July after the closure of 3.2 million tonnes per year of illegal smelting capacity in Shandong province.
It fell further amid winter smog pollution curbs imposed on industrial manufacturing plants, before bouncing back in December as new smelters opened.
“There is more capacity in the market,” said Lachlan Shaw, global commodity strategist at UBS. “The price is good. A lot of inflationary pressures we saw over the winter last year have ebbed...so it’s a good time to be making aluminum.”
Shanghai aluminum prices climbed by 2.1 percent over July and a favorable arbitrage to international prices led to bumper Chinese exports last month.
“The raging bulls out there have taken a view that new Chinese capacity growth is done. I don’t necessarily agree,” said Shaw. “There has been significant new capacity commissioned in the past 12 months (and) there is still more new capacity coming, all of which is legal.”
Aluminum production in 28 northern Chinese cities, including parts of Shandong, will once again be subject to cuts of at least 30 percent this winter, according to a draft plan released by the Ministry of Ecology and Environment earlier this month.
Over the first seven months of this year, China produced 19.4 million tonnes of aluminum, up 3 percent from the same period last year, the data showed on Tuesday.
Production of a group of 10 nonferrous metals - including copper, aluminum, lead, zinc and nickel – rose 8.5 percent to 4.62 million tonnes in July from a year earlier, its highest monthly figure since December 2017. January-July output of this group was up 3.9 percent at 31.36 million tonnes.
The other non-ferrous metals are tin, antimony, mercury, magnesium and titanium.
Reporting by Tom Daly; Editing by Kenneth Maxwell