Views: 0 Author: Site Editor Publish Time: 2022-12-07 Origin: Site
China is both the world's largest buyer and a significant producer of aluminium. It continues to be the industry's key growth driver. Over the past few years, China's domestic aluminium output has not kept up with demand.
According to "China Aluminium Market Analysis," the growth of aluminium is dependent on a variety of variables. Including industrial growth, economic expansion, and expansion of the aluminium end-user market.
In this article, the impact of the Chinese aluminium business on the global aluminium market is discussed. So the industry's present and future are examined. It thoroughly examines market trends, market evolution, and development possibilities.
China produced almost 12.56 million tons of primary aluminium in 2007. The supply-demand balance is under pressure from increasing demand and declining output. China's Aluminium sector is predicted to develop by 12.5% from 2008 to 2018. This compared to a 7% increase for the massive company during the same period.
The extraordinary increase in metal demand from China for domestic applications is mostly attributable to investments in infrastructure. It also includes the construction of homes for the country's rapidly growing urban population. Energy scarcity will eventually prevent China's primary aluminium output from growing as quickly as it did previously.
Reuters, BEIJING/HANOI, July 27 - Given the high price of downtime and the anticipation of a jump in international demand. Therefore the recent decline in aluminium prices that have reduced producers' profit margins will have little impact on China's production.
In the short term, local prices should be under pressure until domestic demand improves. At the same time, China is the biggest supplier of light metal. However is likely to help meet demand abroad, particularly in Europe and the USA.
China's output of aluminium is expected to increase from 10.11 million tons in the second quarter to 10.42 million metric tons. In the third period and 10.54 million metric tons in the fourth, according to state-backed metals research firm Antaike.
On July 15, the most actively traded August Aluminium product on the Shanghai Futures Exchange dropped to $2,557.22 a tonne. However, this is said to be the lowest level since April 2021. So the data from Macquarie shows that the decline has reduced production profits from the metals to 650 Yuan per tonne. This is as much as 5,500 yuan through March.
There is general agreement that producers are highly unlikely to reduce or stop production even when businesses become unprofitable.
According to Wang Min, an Aluminium analyst at CRU Group, "smelters are continuing on track to increase production." It started releasing capacities after the profits it earned in the first quarter of 2021.
Furthermore, according to CRU's analysis of its China cost curve for the second quarter of 2022. Thus, over half of China's aluminium processing equipment would generate income at a Chinese price of 17,225 yuan per tonne. However, at a point in the year, the contract was valued at 18,090 yuan.
Moreover, aluminium supply showed modest growth this year with production ramping up. Thus, new capacity is being launched in producing regions like Yunnan and Gansu provinces. Regarding China's eased electrical controls over energy-intensive sectors.
Hence, according to a source from an aluminium company, "many producers just returned to the market with loosening electrical controls." However, they won't readily suspend output given the large price of stopping furnaces and resuming. The solid earnings they generated over the past year might enable them to continue producing. This is possible even in an unprofitable environment.
Antaike reports indicate that local demand is anticipated to increase at the conclusion of the 4th quarter. This will happen before dropping in the fourth quarter. The spot market has seen a decline in speculative activity as a result of the current bearishness. Cost is one factor, but production and demand balance and economic growth are more important.
The production of aluminium, which requires a lot of energy, has been reduced outside of China. However, this is due to the rise in electricity and power costs, particularly in Europe.
The potential for exporting aluminium goods has also encouraged Chinese firms to keep up production. As a matter of fact, according to data from China's customs, there was an increase. The production of unwrought aluminium and aluminium products for the first half of 2022 increased by 34% year over year to 3,509,079 metric tons.
LME Aluminium stockpiles MALSTX-TOTAL as of Wednesday were at their lowest level in nearly 22 years. This happened to 1.97 million metric tons one year earlier. At 191,198 metric tons, ShFE stockpiles of the metal were almost at their lowest level since January 2020.
In a webinar on July 19, Geordie Wilkes, director of analysis at Sudden Financial. stated that the market conditions were "very, really tight" in Europe and "pretty tight" in the United States. He also stated that the energy problem will support aluminium prices into the first half of 2023.
Technology-based decarburization of China's aluminium industry will assist in achieving net-zero emissions.
However, due to China's dependence on coal-fired energy, it accounts for more than 80% of all energy used. The carbon intensity of aluminium smelted there is higher than in places like Europe.
But switching to renewable energy alone won't be enough for China to produce low-carbon aluminium. We also need scalable, economically effective decarburization technologies that address the direct emissions from aluminium manufacturing.
Furthermore, a report was released in April 2022 by Accenture and the World Economic Forum. However, the emissions reduction technologies for the aluminium industry were described in that report. Thus, this relates to their development in China and the difficulties they face in becoming commercially viable.
So in order to cut processing emissions by about 65% during the next 40 years, something has to be done. Hence producers will need a variety of technologies that will need to be created. They will also need to be deployed over the short, mid, and long terms. These technologies will range from hydrogen development to recycling capabilities.
China produces about 60% of the world's production of aluminium, making it the greatest producer in the world. So China's carbon footprint is also greatly impacted by the aluminium industry. This actually accounts for about 5% of all emissions there. Therefore, Aluminium manufacturers must assist China in achieving its 2060 gross goal. We implore you to visit our homepage for more intriguing topics.
For any further questions, please do not hesitate to contact us at toby@gdcalm.com.