High Aluminum Supply Growth in the First Half of the Year Expected to Slow Down Subsequently
This year, domestic electrolytic aluminum operating capacity has increased from 42 million tons to 43.4 million tons, with output in the first half of the year growing by approximately 5.3% year-on-year. The newly added capacity in Inner Mongolia has been put into production, and the resumption of production in Yunnan has been completed, leaving very limited room for additional capacity. About 250,000 tons of capacity in Guizhou and Sichuan are planned to resume in the third quarter. Given the current situation, the peak operating capacity of electrolytic aluminum this year is expected to be around 43.7 million tons, with an output of 42.8 million tons, marking a year-on-year increase of 3.1%. It is important to monitor whether there will be further production cuts in Yunnan in the fourth quarter.
Overseas capacity growth is even lower. According to data from the International Aluminum Institute, overseas electrolytic aluminum production was 14.58 million tons from January to June, a year-on-year increase of 2.1%. Only China Hongqiao’s 250,000 tons in Indonesia and part of Rusal’s Taishet capacity are planned to be put into production this year. The annual growth rate of overseas electrolytic aluminum output is expected to remain at around 2%. Progress on projects under construction is slow, and most projects, even if put into production in 2025, will not significantly contribute to output.
From January to June, domestic primary aluminum net imports were 1.19 million tons, a year-on-year increase of 178%, leading to an over 8% year-on-year increase in primary aluminum supply in the first half of the year. As imports faced deep losses in the second quarter, monthly net imports have dropped from a peak of 248,000 tons to 114,000 tons. It is expected that the annual supply growth rate will gradually decrease to 4%.
