Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Due to structural reforms on the supply side of the primary aluminium industry, the price of metal has continued its upward swing in China since the last quarter of 2020, according to a report published in Chinese local media. 


The effective control measures of the COVID-19 pandemic has aided the recovery of a consumption of electrolytic aluminium in China. The control measures for energy consumption in Inner Mongolia under China’s target to peak carbon emissions by 2021 before reducing it, has impacted the primary aluminium industry in China, the report said. 



Climbing prices

The price of electrolytic aluminium has risen to the current CNY17,700 ($2,725.05/mt) from CNY11,200($1,724.32/mt) in March 2020, and the static increase in aluminium per ton reached CNY6,500($1,000.72/mt) in a year.


The statistics showed that the average profit of Chinese electrolytic aluminium industry in February was over CNY2,600 ($400.32/mt). In February, the average price of East China electrolytic aluminium was CNY16,069 ($2,474.03/mt), and by mid-March, the aluminium price had risen to CNY17,700 ($2,725.05/mt). 


The report added that the cost of raw material like alumina has been relatively stable recently. Pre-baked anodes rose CNY150-200 in March compared with February. Other cost items too remained stable. The average profit of the Chinese electrolytic aluminium industry has crossed CNY400 ($61.58/mt). Buoyed by high profits, the utilisation rate of China’s electrolytic aluminium production capacity continued to increase, reaching 93.9pc as of mid-March.


Production capacity up

With the climbing prices of primary aluminium and in addition to the rising profit margins, China’s idle electrolytic aluminium production capacity is back in action. Few companies resumed their expansion plans for existing production capacity. 


Henan’s Sengkang Aluminum’s 240,000mt production capacity is expected to resume production in the first half of 2021. Gansu’s Zhongrui Aluminium is mulling resumption after the intervention of large aluminium groups. Sichuan Guangyuan Qimingxing Aluminium Industry recently issued a bankruptcy asset auction announcement with condition that bidders must complete the project’s capacity expansion. With this expansion, the production capacity will reach to 250,000mt from 120,000mt.


Inner Mongolia

As a part of the dual control of energy consumption in Inner Mongolia, regions with hydropower resources will continue to undertake the transfer of thermal power electrolytic aluminium production capacity. 



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