China's record-breaking aluminum production is expected to continue for the remainder of the year, with national output projected to rise by 3% in the fourth quarter, reaching 11 million tons, according to Shanghai Metals Market (SMM). This growth is supported by a surge in hydropower generation, ensuring that key production regions, such as Yunnan, will avoid the power shortages that have led to production cuts in recent years.
In August, China's aluminum smelters produced a record 3.69 million tons, and while September may show a slight dip, production is expected to rebound to 3.72 million tons in December, SMM reported.
Despite a slowing economy, demand for aluminum has remained strong due to the metal’s increased usage in clean energy applications such as electric vehicles (EVs) and solar power systems. Aluminum production is highly energy-intensive, but hydropower, particularly in Yunnan, has seen a 22% increase in output in the first eight months of 2024, ensuring stable power supplies.
In addition to hydropower, China has also accumulated substantial coal stockpiles, further reducing the risk of power shortages at smelters across the country. This reliable energy supply is critical, as the government continues to stimulate economic activity amid ongoing challenges in the property market.
As demand rises and inventories decline—down 20% since March—analysts expect aluminum prices, which hit a two-year high in May, to remain elevated. The combination of increased consumption and government stimulus is expected to keep the aluminum market tight through the end of the year.
This production boom comes as China focuses on boosting economic growth, with policymakers implementing stimulus measures aimed at stabilizing the property market and reviving economic momentum.
The government’s commitment to ample energy supplies and the aluminum industry's strong ties to the clean energy sector are positioning China to meet both domestic demand and export needs in the coming months.
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