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column-china\'s giant aluminium machine cranks up again: andy home

by:Wangeshi     2021-03-17
The opinion expressed here is the opinion of the columnist of Reuters. )
* Production vs Shanghai price: tmsmrt
On February 21, mhkevin rs/2, Andy\'s House, London (Reuters)-
Global aluminum production is growing at an annual rate of 62.
In January, 0 million tons were added-time record.
This is also a record created by China.
While primary metal production in the rest of the world fell by 182,500 tons on an annual basis during December and January, China\'s primary metal production surged.
It is true that China\'s production data is accompanied by strong health warnings, especially at this time of year, but the potential trend is becoming more and more obvious.
The smelter is responding to price signals.
In Shanghai, for the first time since November, the most active aluminum contract has exceeded 14,000 yuan per ton.
In addition to last night\'s peak, this is the highest price since the beginning of 2013.
Ironically, prices have risen in part because of China\'s threat of capacity cuts for environmental reasons.
The jury is still very unclear about whether this threat will become a reality, but in the short term
Production, not insufficient
Production is a more pressing issue for aluminum prices.
Figure of aluminum production and Shanghai price: tmsnrt.
China\'s aluminum production has hit a new record of 2.
According to the China Association of Non-ferrous metals industry, 95 million tons in January (CNIA).
This is equivalent to an annual rate of 34.
7 million tons, accounting for 56% of the world\'s total,on-
Annual growth of nearly 19%.
Statistics may exaggerate the reality.
CNIA aluminum production data released by the International Aluminum Research Institute shows that during the period covering the Western and Chinese new year, there is a history of drastic fluctuations.
Nevertheless, as shown in the above figure, although individual data points may suspect that the underlying trend points to a substantial rise in production.
China\'s aluminum production began to shrink in December 2015 and did not increase in the first half of last year.
This is in response to the price crash to less than 9,000 yuan per ton in 2015, with some producers cutting production capacity and new projects stalled.
However, the steady recovery in prices in the second half of 2016 has inspired a restart and new capacity increase, with production growth again positive in September, and monthly acceleration thereafter.
In the recent period of this price recovery, part of the pricing was the possibility of being forced to shut down aluminum capacity due to environmental reasons.
China\'s Ministry of Environmental Protection has proposed closing industrial capacity in five provinces in the winter to ease long-term pollution problems in cities such as Beijing.
Aluminum smelting is one of the potential target industrial sectors.
This cannot be overemphasized in any way, and is still a proposal that is likely to be heavily resisted by aluminum producers and local governments.
In addition, while capacity reduction is possible, this will not happen soon as this winter is coming to an end.
But as smog rises to the top agenda of Chinese policy makers, environmental issues may exceed all other issues, including the economy.
Beijing\'s new focus on clean air has had a more direct impact, which is felt by suppliers of pioneering materials such as coal tar, asphalt and anode.
According to AZ China consulting, all of these industries were targeted for strict environmental inspections last year, a blow that lasted to 2017.
\"In the long run, the start-up rate of tar and asphalt plants will be at a lower level, which will put a lot of pressure on prices,\" the company said . \".
The rising prices of these often overlooked smelting process inputs are a real and realistic driver of the rise in aluminum prices, although the vague, deferred threat of the closure of smelters is still in the background.
However, in the short term, the increasingly urgent issue of the current rise in aluminum prices in Shanghai and London is
China\'s production trends have changed over the past few months.
JPMorgan Chase, for example, has closed its recommended aluminum long position, although it sees the potential of policy --
Dictated smelters cut \"to make the risk of aluminum prices more asymmetric in the medium term \". (
Metal weekly, February. 15, 2017).
The recent warning signal came from a rise in the stock market.
Registered on the Shanghai Futures Exchange (ShFE)
So far, 88,496 tons have surged this year to 189,218 tons.
Since its low of 83,775 tons in last September, shares on the overall exchange have more than doubled.
Seasonality is mixed in the form of New Year holidays, but the recovery of production is also a factor.
JPMorgan Chase cited data from the CRU research agency as saying that, in addition to ShFE, Chinese inventories were reported to have \"increased by nearly 270,000 tons since the end of the Spring Festival holiday\" and could grow even more in the coming weeks, because \"in the first quarter of 17 countries, the excess of metal made into the warehouse \".
Adding to the oversupply is that due to a comprehensive revision of truck transport regulations last year, new metal flows were stranded at the aluminum production center in Xinjiang, Northwest China.
According to AZ China, inventory in Xinjiang is declining, but there are still nearly 350,000 tons waiting for shipment from smelters and transportation hubs.
The combination of rising prices and rising stocks is not a combination that will last for a long time.
So far, the tension has been largely internal within China.
But whether it is still a meaningless question.
Export half
In the past, manufactured goods have been a safety valve for the country\'s overproduction.
Export traffic fell by 3. 0 percent to 4.
Last year was 1 million tons, the first annual decline since 2012.
This certainly reflects the tightening of the Chinese market caused by limited supply growth.
Recent production data indicate that the limitation period has ended and that the re-acceleration of exports may be only a matter of time as inventory increases.
If they do, China\'s rising aluminum machine will no longer be just a problem with China\'s aluminum price.
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