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Chinese aluminum production continues at a blistering pace. Aluminum production averaged over 114,000 mt/day in September, a new record daily volume, as authorities have eased power restrictions. However, total monthly production was 3.42 million mt last month, down slightly from 3.51 million mt in August, according to China’s National Bureau of Statistics. Production dropped month-over-month because authorities in Yunnan province, a key production area, asked smelters to reduce output from September 10 due to low hydropower supply, according to Reuters. The country has produced 29.88 million mt of aluminum so far this year, up 2.8% from the same period last year. |
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This increasing daily production comes as Chinese economic data shows their economy is slowing. Also, Chinese aluminum imports have dropped 19.6% month over month, according to Chinese customs data. AEGIS notes that these factors have likely contributed to falling global aluminum prices. Those carrying inventory and concerned about decreasing prices might consider hedges that provide downside protection, such as selling swaps or buying put options. Such positions are standard; however, they can result in opportunity costs or cash costs if metal prices increase. Please contact AEGIS for specific strategies that fit your operations. (10/25/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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Price Indications |
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AEGIS Insights |
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10/19/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 10/05/2022: European Aluminum Smelters Might Have Negative Margins Through 2023 8/31/2022: Will Chilean Production Issues Drive Copper Prices Higher? 8/24/2022: Chinese Aluminum Supply Issues Could Rally Prices |
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| Important Headlines | ||
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10/24/2022: China Sept aluminium output rises 9.3% y/y as power restrictions ease 10/24/2022: LME Week: Al market braces for the unknown 10/21/2022: Alcoa reduces 2022 alumina, bauxite outlook |
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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