MI ANALYSIS: Chinese production growth shows signs of topping out

There are just the first tentative signs that Chinese primary aluminium production growth is starting to top out, but that shouldn’t mask the fact that the country’s output is still accelerating at a super-fast pace. The latest figures from the China Nonferrous Metals Industry Association (CNMIA) show that production in June was a fresh monthly record at 1.034 million tonnes. That was up by 33.4% year-on-year, exactly matching May’s growth rate and below the early-2007 peak, when growth was running at around 40%. By the way, the CNMIA’s figures are now running significantly higher than those issued by the National Bureau of Statistics—the cumulative difference between the two for the year to date is now 233,000t in favour of the CNMIA. We and other analysts view the CNMIA series as the more reliable of the two. It’s worth stressing that we are still talking about explosive growth rates here relative to anywhere else in the world (see our item above for comparisons with Western World rates). Annualised production in June was 12.580 million tonnes. Production growth should slow further going into H2 2007 on the basis that those smelters which haven’t already been reactivated in the face of much better domestic alumina availability are now unlikely to do so. However, unless there is a significant slowdown in growth, production this year looks set to surprise on the upside…again. Official estimates at the start of the year—from both the CNMIA and the Antaike research house—were for production to be around 11.7 million tonnes this year.