Scrapex Banner
Author: 28 Mar 2012 Last updated at 04:52:39 GMT

Chinese aluminium production hits record level in early 2012: Barclays

BEIJING (Scrap Monster): Chinese aluminium production has surged to a record level early in 2012 as low-cost capacity is ramped up, said Barclays Capital in a daily commodity research note.

According to Barclays, the supply-side of the aluminium market has experienced a sharply divergent trend so far in 2012 between China and the rest of the world. Following the announcement of several cutbacks to capacity in North America and Europe at the turn of the year, the IAI data for February essentially confirmed this with global output ex-China falling to68.9Kt, the lowest level since December 2010 and the first y/y decline since the beginning of that year.

China, however, has seen the opposite trend, with the CNIA data showing output in February at 53.4Ktd, up by 19% y/y and a new record level. How can China achieve such production growth when the rest of the world cutbacks?

First, it would be wrong to state that China has not suffered cut backs. Close to 1.1Mty of capacity has been idled since Q3 last year, particularly in Guangxi and Henan provinces. This was predominantly due to drought-related power shortages in Southern China(750Kty) and, to a lesser degree, price related (350Kty), the bank added.

“However, that the headline production rate has risen to a new record high irrespective, reflects three things. First,although smelters at the top end of the cost curve are experiencing deeply negative margins, we understand that cost pressures for average smelters may not be as intense as is perhaps perceived owing, in part, to the integration of alumina refineries and smelters which, in some cases, is believed to reduce alumina costs by as much as 30%from spot prices,” they continued.

Second, in terms of driving output higher, of the 4Mty of new capacity ramping up in China in 2012, 3Mty of which is already in action, much is relatively lowercost and unimpeded at these price levels.

In the majority of cases, these new smelters,located in the lower-cost power provinces of Xinjiang, Qinghai, Shanxi and Ningxia,have higher energy efficiency. Anecdotal evidence also suggests that some capacity has also continued to operate due to the access to credit made possible through using aluminium as collateral in inventory financing, the bank stated.

It would appear fair to conclude that unless prices moderate – and an expectation for tighter domestic market fundamentals as the year progresses would point otherwise – Chinese production is likely to continue to grow in 2012 juxtapose to the likely constraint seen in the rest of the world, Barclays concluded.



14ct Gold Scrap Price Charts

22ct Gold Scrap Price Charts

18ct Gold Scrap Price Charts


University team creates 'transformers' from scrap metal

July 25th 2014 01:46 PM
University team creates 'transformers' from scrap metal
An associate professor in Changsha, the capital of Hunan province, has made "transformers" similar to those in the popular movie…

US H1 scrap average prices held steady for sixth straight week

July 25th 2014 08:08 AM
US H1 scrap average prices held steady for sixth straight week
The US H1 scrap price average prices were at $357.50 per long ton, as on 21st July, 2014

H2 scrap average prices in Japan drop further

July 25th 2014 03:58 AM
H2 scrap average prices in Japan drop further
The average price of Japanese H2 scrap continued to drop during the third week of July

Brazil's scrap exports surged 85% over previous year in June '14

July 25th 2014 03:22 AM
Brazil's scrap exports surged 85% over previous year in June '14
The latest statistics indicate that Brazil's scrap exports have recorded strong growth year-on-year during the month of June
blog comments powered by Disqus
Next Story