China's aluminum production reached a new high in June, driven by capacity expansions in Inner Mongolia and the resumption of production in Yunnan province following heavy summer rainfall. According to the National Bureau of Statistics, China produced 3.67 million tons of aluminum in June, a 6.2% increase year-on-year, setting a new monthly record. In the first half of the year, production rose 6.9% from the same period in 2023, totaling 21.55 million tons.
The restart of previously curtailed production in Yunnan was facilitated by improved hydropower conditions, following significant rainfall over the past few months. China's hydropower generation increased by 8.4% from January to April, benefiting provinces like Sichuan and Yunnan due to record rains in Guangdong.
Additionally, capacity expansions in Inner Mongolia contributed to the increased output, encouraged by higher aluminum prices. In late May, Shanghai Futures Exchange (SHFE) aluminum prices peaked at around 21,530 yuan ($2,970/ton), up from below 19,000 yuan in the first quarter. However, prices have since settled to around 20,000 yuan.
Despite the production surge, demand in China has not kept pace, leading to a rise in stock levels. Deliverable aluminum stocks in SHFE warehouses hit a 15-month high at the end of last week.
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