China Aug aluminium output falls for 4th month as supply cuts mount

China Aug aluminium output falls for 4th month as supply cuts mount

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Aluminium output at 3.16 mln T in Aug vs 3.26 mln T in July

Xinjiang became latest region to restrict supply last month

Overall Aug nonferrous output at 5.3 mln T

Updates with bullets, analyst comment, background

Sept 15 (Reuters)China’s aluminium output in August slipped for a fourth straight month, official data showed on Wednesday, as restrictions on metal production and power usage in key smelting hubs keep supply tight.

The world’s top producer of the metal produced 3.16 million tonnes of primary aluminium last month, the National Bureau of Statistics said. That was down 3.2% from 3.263 million tonnes in July but up 0.4% year-on-year, it said.

Restrictions on energy-intensive primary aluminium production in China have hampered the industry this year, as regions suffering from power shortages or under pressure to reduce emissions tell smelters to cut back.

Furthermore, to stop what it said was illegal over-production, a prefecture in the western Xinjiang region last month ordered a 10% cut in monthly output levels for August-December across five smelters. Xinjiang is home to almost one-fifth of the country’s primary aluminium capacity.

That brought total cuts in China so far this year to 2.33 million tonnes on an annual basis, or almost 6% of operating capacity, state-backed research house Antaike said.

This month, Yunnan province in Southwest China told smelters to keep their September-December average monthly output no higher than August levels, torpedoing their hopes of ramping up again after earlier curbs, while neighbouring Guangxi is implementing similar measures.

“(This) is likely to get worse in the coming months,” said Paul Adkins, managing director of aluminium consultancy AZ China.

“We understand even some new projects and some re-starts have been put on hold. We were expecting a pick-up in capacity in Q4, but that won’t happen now.”

China’s output of 10 nonferrous metals – including copper, aluminium, lead, zinc and nickel – was 5.3 million tonnes in August, the statistics bureau said, its lowest monthly total in a year. That was down 1.3% from 5.367 million tonnes in July but up 0.4% year-on-year.

The other metals in this group are tin, antimony, mercury, magnesium and titanium.

(Reporting by Emily Chow, Tom Daly and Shivani Singh; Editing by Richard Pullin and Tom Hogue)

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