China’s production of primary aluminium rose 7.2% in May to 3.65 million metric tons, the highest level in almost a decade. This was driven by strong growth prospects for the solar and electric vehicle sectors, which have boosted demand for the metal.
The world’s biggest aluminium producer saw its average daily output reach 117,742 tons in May, down from 119,333 tons in April, according to calculations based on the data from the National Bureau of Statistics.
Market participants attributed the surge in production to signs of robust demand, which have helped drive speculative buying of aluminium futures. The benchmark aluminium contract on the London Metal Exchange gained for a fourth consecutive month in May, reaching $2,700 per ton, a level not seen since June 2022.
Higher prices have offset the increased production costs caused by a surge in alumina, a key raw material. Research house Antaike estimated the industry averaged a profit of 3,550 yuan per ton, 79% higher than a year earlier and little changed from the prior month.
Production is expected to rise further, with a total of 400,000 tons of production capacity set to start operations in the southwestern Yunnan, Sichuan and Guizhou, as well as Inner Mongolia in the country’s north. Improved hydropower supply in Yunnan, one of China’s main producing regions, has also contributed to the ramp-up in aluminium production.
In the first five months of the year, China produced 17.89 million tons of aluminium, a rise of 7.1% from the same period last year. Production of 10 nonferrous metals, including copper, lead, zinc and nickel, also increased by 7.4% to 6.61 million tons during the period.