MNI: China Aluminium Demand To Slow Slightly In 2024
MNI (BEIJING) - China’s aluminium consumption growth will likely slow to slightly below 5% this year from 2023's 6% gain, as appetite cooled over Q3 amid the economic slowdown, and despite robust demand from the energy and transportation sectors, local analysts have told MNI.
Increasing power infrastructure construction and policies that encourage the replacement of old materials in the transportation sector will support aluminium demand at about 43 million tonnes this year, said Gu Fengda, nonferrous metals chief analyst at Guoxin Futures. “The transportation sector accounted for 20.1% of aluminium consumption in August, surpassing the 18.4% for housing,” Gu added, highlighting demand from electricity and the packaging sectors grew 18.8%, and 7.7% during the first eight months of the year.
Q4’s appetite depends on the announcement of further stimulus and export performance, he said, noting 2024 growth will likely slow to slightly below 5% y/y in 2024, given appetite had cooled amid Q3's economic slowdown.
The Ministry of Finance signalled support aimed at the real-estate market and local-government debt on Saturday, with officials noting the central government had substantial room for borrowing and raising its deficit-to-GDP ratio further. Authorities are expected to announce further fiscal measures after the next Standing Committee meeting over the coming weeks.
Prices on the Shanghai Futures Exchange are also expected to rise in Q4, particularly over the October-November peak season, with resistance at about CNY22,000 per tonne and support near CNY18,500, Gu continued. However, an unexpected decline in precipitation levels in Yunnan, a major aluminium producing province that relies on hydropower, would mean production cuts and tighter supply, Gu noted.
Strong growth in energy transition sectors, such as solar panels, will drive about 3% growth y/y in China’s aluminium consumption in 2024 overall, estimated Chen Xinlin, China aluminium consultant at Wood Mackenzie, a global energy transition consultancy. (See MNI: China Electricity Demand Growth To Fall From Q1 High)
SUPPLY INCREASES
Domestic primary aluminium output is also expected to rise to 42.8 million tonnes, up from 2023’s 41.6 million tonnes, due to higher smelter utilisation this year, Chen added.
Plant resumptions in Guizhou and Sichuan, alongside expectations of less production curbs in Yunnan following heavy summer rain, meant Q4 output would maintain strong y/y growth, Gu argued.
Data from the National Bureau of Statistics showed primary aluminium production was 28.9 million tonnes between January to August 2024, a 5.1% y/y increase.
IMPORTS UP
Imports will likely reach 3 million tonnes in 2024 supported by favourable pricing conditions abroad, with Russian shipments increasing in particular, Chen said, noting bauxite imports were also up after authorities intensified inspections at domestic mines leading to a shortage.
China has imported 1.5 million tonnes of primary aluminium over the year to August, up 123.3% y/y, following 2023’s 130.8% y/y rise. “A shortage of ingots in China after smelters increased sales of liquid metal contributed to import growth,” Chen added.
Gu noted strong growth in automotive and aerospace industries, which used high-end aluminium not available domestically, had supported inbound shipments. “Russian imports could increase should the U.S. and EU enforce additional sanctions against Moscow,” Gu said.