BEIJING (Reuters) - China’s aluminum producers cut output by 3 percent in August from the month before, government data showed on Friday, as high raw material costs squeeze their profit margins.
China, the world’s biggest aluminum producer, churned out 2.84 million tonnes of the metal last month, according to the National Bureau of Statistics (NBS).
That was down from 2.93 million tonnes in July, which matched the all-time monthly high, but was up 7.8 percent from a year earlier, the NBS said.
On a daily basis, China produced around 91,600 tonnes of primary aluminum last month, the lowest since May, according to Reuters calculations based on the data.
Aluminum prices on the Shanghai Futures Exchange climbed 2.1 percent over August, but spot prices for alumina, the substance used to make the metal, rose by 10.8 percent in the key eastern China region over the same period, pressuring smelters.
The global alumina market has been tight this year due to an outage at Norsk Hydro’s Alunorte plant in Brazil, U.S. sanctions on Russian producer Rusal and a strike at Alcoa’s alumina refineries in Western Australia.
Chinese alumina producers have taken advantage of skyrocketing international alumina prices to make rare big-volume exports of the material, which has reduced availability domestically.
Victor You, an analyst at CLSA in Hong Kong, said he had heard of aluminum production cuts being made in central China’s Henan province, which he described as “traditionally a very high-cost place to run aluminum smelters”.
“That’s because a lot of the smelters do not have an integrated alumina operation. If they have to source from outside, it is going to be pretty rough for them,” he said.
Spot alumina prices in central China are currently at their highest since December.
“(Aluminum margins) have been falling sharply, so it wouldn’t surprise me if some curtailments happened,” You added.
Over the first eight months of 2018, China produced 22.21 million tonnes of aluminum, up 3.5 percent year-on-year, the NBS data showed on Friday.
Output of a group of 10 nonferrous metals - including copper, aluminum, lead, zinc and nickel – rose 5.7 percent year-on-year to 4.54 million tonnes, but was down 1.8 percent from 4.62 million tonnes in July.
Output from this group in the first eight months was up 3.8 percent at 35.71 million tonnes. The other non-ferrous metals in the group are tin, antimony, mercury, magnesium and titanium.
Reporting by Tom Daly; Editing by Joseph Radford