Heavy rains have improved hydropower reserves in Yunnan and allowed smelters to recommence operations after drought sapped their electricity supply in recent years. Photographer: Oliver Bunic/Bloomberg
Beijing: China’s aluminum production hit a record last month as smelters brought back idled capacity, potentially setting up the market for further declines after prices hit a two-year high in May.
Heavy rains have improved hydropower reserves in Yunnan and allowed smelters to recommence operations after drought sapped their electricity supply in recent years. Another 330,000 tonnes of capacity is expected to resume in the southern province this month, according to Bloomberg Intelligence, which expects prices of the lightweight metal to slip in June as demand has also softened in the wake of higher prices.
Aluminium output surged 7.2% year-on-year to 3.65 million tonnes, according to the statistics bureau yesterday, although the daily rate slipped from the shorter month of April.
Steel production rose 2.7% to 92.86 million tonnes after declining in recent months, although again the foundations are wobbly. Mills are relying on manufacturing and exports to replace the collapse in real estate demand. But margins are still underwater and the government has pledged once again to restrain production this year to meet its climate goals.
Among energy products, the impact of weak consumption was also evident in the oil processing sector. Refining fell 1.8% as more plants turned to seasonal maintenance to escape sluggish demand.
Both natural gas and crude oil output rose as Beijing continues to reduce its reliance on imports. But coal production slipped again, and is now tracking 3% below last year’s record-setting pace over the first five months of the year.
Thermal power generation fell on an annual basis for the first time since September due to the surge in output from hydropower dams and solar farms.
The drop in fossil fuel burning is another sign that China’s emissions may have peaked after renewables installations jumped to record levels last year. — Bloomberg
