November 14, 2018 / 4:15 AM / 2 years ago

China October aluminum production falls for third month ahead of winter

BEIJING (Reuters) - China’s primary aluminum output fell for a third straight month in October, according to official data released on Wednesday, as low aluminum prices prompted smelters to cut production even before government-mandated winter restrictions kick in.

FILE PHOTO: An employee operates a crane to lift aluminium wires at a warehouse in Zouping county, Shandong province, China April 18, 2018. China Daily via REUTERS

The world’s top aluminum maker produced 2.72 million tons of the metal last month, according to data from the National Bureau of Statistics.

That was down 2.5 percent from 2.79 million tons in September, although up 6.8 percent from the same month a year ago.

On a daily basis, China produced around 88,000 tons of aluminum last month, versus 93,000 tons in September, according to Reuters calculations. September had one day fewer than October.

That was the lowest so far this year on a daily basis, according to historical data.

China has opted not to enforce a repeat of blanket 30 percent output curbs on aluminum and alumina output in 28 northern cities this winter. The curbs were in place for the peak winter heating season from Nov. 15-March 15 in 2018/19.

This winter’s cuts are to be decided by individual cities but it remains unclear how much major smelters will have to cut.

Market forces are, however, leading to cutbacks already, as smelter margins are squeezed.

Shanghai aluminum prices fell 2.1 percent in October, partly on expectations of more lenient curbs, and hit a two-year low of 13,790 yuan ($1,983) a ton on Nov. 6.

Jackie Wang, an aluminum analyst at CRU in Beijing, estimates 1.4 million tons of annual smelting capacity has been shut because of the slump in prices.

Over the first 10 months of 2018, China produced 27.71 million tons of aluminum, up 4.4 percent year-on-year and still on course for an annual record high, the NBS data showed.

Meanwhile, output of 10 nonferrous metals - including copper, aluminum, lead, zinc and nickel - came in at 4.52 million tons in October, down 0.9 percent from 4.56 million tons in September and up 5.5 percent from 4.46 million tons in October 2017.

Output from this group in January-October was up 4.4 percent year-on-year at 44.79 million tons. The other metals in the group are tin, antimony, mercury, magnesium and titanium.

Reporting by Tom Daly; editing by Richard Pullin

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