LONDON (Reuters) – Global aluminium production is contracting this year. Cumulative output in the first eight months of 2019 slid by 0.6% to 42.5 million tonnes with production down in both China, the world’s dominant producer, and the rest of the world, according to the International Aluminium Institute (IAI).
If the trend continues, this will be the first year since 2009 to see a simultaneous production decline in both halves of the aluminium universe.
Visible inventory, meanwhile, has fallen to multi-year lows. Total stocks registered with the London Metal Exchange (LME) last week slipped below 900,000 tonnes for the first time since 2008, while Shanghai Futures Exchange stocks are at two-year lows.
None of which has done much for the aluminium price. LME three-month metal has this morning touched $1,713.50 per tonne, its lowest since January 2017. The problem is that the aluminium market doesn’t believe that falling production and stocks are anything other than fleeting trends.
The collective focus is now on the problem of demand weakness. Production outside of China was down by 0.45% in the January-August period.
Signs of rising output in both North America and Russia, thanks to the restart of the Becancour smelter in Canada and the ramp-up of the Boguchansk plant in Siberia, are currently being offset by production weakness in Latin America and Western Europe, down by 13% and 7% respectively.
For the rest of this column: https://uk.reuters.com/article/us-metals-aluminium-ahome/column-falling-output-and-stocks-fail-to-halt-aluminium-price-slide-idUKKBN1WG3WF