According to official data released by the National Bureau of Statistics of China, China’s primary aluminum output climbed to 3.42 million metric tons in May, representing a year-on-year increase of 3.1%. This figure surpassed April’s output of 3.36 million metric tons and set a brand new all time high for monthly domestic primary aluminum production.

Calculated on a daily average basis, the May daily output stood at 110,322 metric tons. Though this reading edged down slightly from April’s record daily average of 112,000 metric tons, the overall production momentum remained robust and upward.

Aluminum analysts from CRU Group commented that China’s primary aluminum output maintained strong growth in May, and regional lockdown policies imposed across the country exerted no material disruption to smelting operations. The research institute projected that output would keep rising through June and July. Since the end of last year, China’s power supply system has generally maintained sufficient electricity allocation for energy intensive industries.

In previous years, China rolled out power curtailment policies to advance carbon peaking and carbon neutrality climate targets as well as tackle regional electricity shortages. Such restrictions dealt a noticeable blow to primary aluminum production, a sector with extremely high energy consumption. Nevertheless, power supply conditions have seen a marked improvement starting from late 2021, enabling domestic aluminum smelters to run at near-full capacity steadily.

Back in 2021, China’s annual primary aluminum output hit a historic peak of 38.5 million metric tons. In the first five months of this year, cumulative primary aluminum production reached 16.4 million metric tons, up 0.3% year on year.

Meanwhile, the combined monthly output of ten major non-ferrous metals including copper, primary aluminum, lead, zinc and nickel rose 3.3% year-on-year to 5.64 million metric tons, marking the strongest monthly growth rate since December 2020. For the first five months of the year, the total output of these ten core non-ferrous metals increased by 0.9% year over year to 27.25 million metric tons.

Dual Impacts on the Global Aluminum Market

Surging primary aluminum output in China carries two-fold implications for the international aluminum market.

On one hand, expanded domestic supply from China effectively eases the tight supply landscape across the global aluminum market, especially amid supply disruptions stemming from geopolitical conflicts in the Middle East.

On the other hand, continuous expansion of China’s smelting capacity is likely to put downward pressure on international aluminum prices, particularly against the backdrop of widespread expectations of slowing global economic expansion.

As reported by Reuters, benchmark aluminum prices have slumped to a nearly six-month low. This price downturn mirrors market concerns over two core factors: the rapid expansion of China’s primary aluminum supply and the subdued outlook for global downstream aluminum demand.