The Commodities Feed: Aluminium production cuts

Metals – Yunnan cuts more aluminium production amid power shortages

LME aluminium prices rose yesterday amid reports of capacity cuts in China’s Yunnan province due to power shortages. The local power grid in China has ordered an additional 415kt of annualised capacity cuts in Yunnan from 18 February, extending the cuts from last year. The affected smelters are not likely to resume production in the first half of the year amid power supply constraints. The new cuts will impact around 740kt of capacity in Yunnan, adding to about 1.1mt of curtailments since September last year, according to estimates from Mysteel. Yunnan’s operational aluminium capacity accounted for about 5.18mt in September before the capacity cuts were announced.     

The latest numbers from International Aluminium Association (IAI) show that the global primary aluminium daily output stood at 188.3kt in January, compared to 189.4kt a month earlier. The total monthly output for the metal remained almost flat month-on-month while rising by 3.3% year-on-year to 5.84mt in January. Similarly, Chinese output rose 5.8% YoY to 3.44mt last month. However, production was down 1.1% monthly. Meanwhile, aluminium production in Western and Central Europe fell 12.2% YoY to 230kt in January as domestic smelting activities remained impacted. Aluminium production in Asia (ex-China) remained almost flat on a monthly as well as an annual basis and stood at 390kt in January.

LME on-warrant copper stocks have fallen the most since 8 December, according to data from the exchange. On-warrant stockpiles fell by 7.5% to 51,800 tonnes, with declines coming from warehouses in Germany and the Netherlands.

First Quantum will suspend copper ore processing at its Panama mine on 23 February, according to a report from Bloomberg, due to limited storage capacity at the site. The Maritime Authority of Panama banned loading copper at Cobre Panama’s port over a certification issue. The mine accounts for 1.5% of global copper production.

Nyrstar said its Auby zinc smelter in France will resume production “on a variable basis”. The smelter initially closed for maintenance in October and remained shut after it was completed amid challenging market conditions. The smelter has a production capacity of 172kt/year.