Global aluminum production rises 1.5% year over year in March

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According to data released by the International Aluminum Institute this week, global primary aluminum production totaled 5.48 million tons in March, up about 1.5% compared with March 2019.

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March production was also up from the 5.15 million tons produced in February.

Production ticked up from February to March, in line with an increase in production from No. 1 producer China, which continues to recover from the coronavirus outbreak’s fallout.

China’s March production reached an estimated 3.1 million tons, up from 2.91 million tons in February.

North American production increased from 314,000 tons in February to 342,000 tons in March.

Production in Gulf Cooperation Council (GCC) countries totaled 507,000 tons in March, up from 475,000 tons in February.

In Asia ex-China, production reached 348,000 tons, up from 335,000 tons in February. Production in east and central Europe totaled 354,000, up from 331,000 the previous month.

Elevated aluminum stocks, depressed demand weighs on prices

On the price front, LME aluminum has been falling since early March.

After reaching $1,732/mt as of March 4, LME primary three-month aluminum has tumbled down to $1,483/mt as of April 21.

As MetalMiner’s Stuart Burns explained last month, China continued to churn out aluminum over the first two months of the year. Reuters reported SHFE stocks had surged from just over 185,000 tons as of the end of December 2019 to just over 519,500 tons as of mid-March.

“The result we and Reuters report is SHFE stocks have mushroomed from 185,127 metric tons at the end of December to 519,542 tons now, as smelters churned out metal that no one could use,” Burns wrote last month.

“Reuters adds that may be just the tip of the iceberg, with more metal trapped at smelters by logistical bottlenecks.

“Downstream producers are only gradually getting back to full production; a disconnect between production and consumption is expected to persist into April, the article states. Even worse, unless there is a dramatic surge in domestic demand — which seems unlikely given the cautious return to work and still perceived risk of a new surge in infections if measures are relaxed too quickly — stock levels could continue to rise into the summer.”

Since then, however, SHFE aluminum has recovered, jumping approximately 8% over the last month to 12,195 yuan ($1,721) per ton on Wednesday.

As noted previously, China’s tentative return to work on the heels of the coronavirus outbreak’s peak in the country will serve as a boost for demand for a wide range of metals. However, as the outbreak continues to hamper operations elsewhere, demand for aluminum from the automotive sector, for example, remains dented.

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Miner Rio Tinto noted demand in China “continues to recover,” but that the demand outlook elsewhere remains uncertain.

“The aluminium industry continues to face challenging conditions in global markets and policy uncertainty, exacerbated by the impact of Covid-19, with global inventory levels rising from 2.2 million tonnes to 3 million tonnes,” Rio Tinto said in its first-quarter operations review. “We continue to actively work on enhancing the competitiveness of our smelters, including discussing energy pricing with stakeholders, to ensure the sustainability of our smelters in Australasia and in Iceland.”

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