AL Circle's weekly wrap
Improved hydropower reserves in Yunnan drive China’s aluminium production to new high
China's aluminium production reached an all-time high last month as smelters resumed operations, potentially setting the stage for further price declines following a two-year peak in May.
Improved hydropower reserves in Yunnan
Heavy rains have replenished hydropower reserves in Yunnan, enabling smelters to restart after droughts previously reduced their electricity supply.? Insights from Bloomberg Intelligence (BI), a trusted source in the financial industry, indicate that an additional 330,000 tonnes of capacity is expected to resume in Yunnan this month. Furthermore, BI forecasts a decrease in aluminium prices in June, attributing it to softened demand following the recent price surge.
According to the statistics bureau on Monday, aluminium production surged by 7.2 per cent Y-o-Y, reaching 3.65 million tonnes, despite a decrease in the daily rate due to the shorter month of April. Meanwhile, steel output increased by 2.7 per cent to 92.86 million tonnes after experiencing declines in previous months, though the stability of this growth remains to be determined.
SMM anticipates
SMM anticipates further improvements in China's aluminium operating capacity in June. This growth is expected to be driven by the ongoing recovery of Yunnan's power supply and the commissioning of the new Huayun Phase III project in Inner Mongolia. The installed capacity is projected to increase to 45.36 million tonnes.
Considering the resumption of other capacities, SMM expects China's annual aluminium operating capacity to reach 43.27 million tonnes by the end of June. Additionally, SMM forecasts that aluminium production in June (30 days) will be approximately 3.54 million tonnes. Read the full news here.
Vedanta Group eyes $10 billion EBITDA, targets $4.2 billion from aluminium division
The Indian multinational mining and metal company Vedanta Group has unveiled a strategic roadmap to achieve a $10 billion EBITDA, underpinned by the execution of over 50 projects spanning multiple business verticals, as reported by ET Now Digital.
This bold plan was disclosed during site visits attended by more than 45 investors, fund managers, and analysts. According to two insiders at these site visits, Vedanta Group anticipates these new projects will generate an impressive $5 billion in free cash flows. This ambitious initiative underscores the group's commitment to significant growth and expansion across its diverse portfolio.
Vedanta Group has invested more than $8 billion in various expansion initiatives. According to the Indian news platform, Vedanta plans to open the world’s largest alumina refinery in Lanjigarh.
As reported by ET, Vedanta's near-term EBITDA of $10 billion comprises $4.2 billion from aluminium, $2.7 billion from Zinc India (zinc and silver), and $0.9 billion from oil and gas. The company's growth projects currently underway include:
The presentation highlights that Vedanta's strategies are well-aligned to capitalise on India's economic growth, with the nation's GDP expected to surge and reach $7 trillion by 2030.
Vedanta has announced a vertical split and plans to list five new firms on the stock exchanges by the end of the year. Under this plan, for each share of Vedanta Limited that shareholders own, they will receive one share in each of the five newly listed businesses. This demerger will create independent, specialised firms focusing on aluminium, power, base metals, oil and gas, and steel and ferrous operations. Meanwhile, the zinc and other existing operations will remain part of Vedanta.
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Primary aluminium production in North and South America demonstrates steady annual growth during April 2024
According to the International Aluminium Institute (IAI), North America’s primary aluminium production dwindled over a month in April 2024 but did not shy away from recording an annual hike.
Total production in the four months of 2024 also increased on an annual basis, indicating an overall positive trend of operation at North American smelters.
As per the data revealed by IAI, primary aluminium production in North America during April 2024 amounted to 331,000 tonnes, reflecting a fall of 2.93 per cent or 10,000 tonnes from 341,000 tonnes a month ago. However, on a year-on-year calculation, the output stood at 11,000 tonnes or 3.44 per cent higher compared to 320,000 tonnes.
From January to April 2024, North America produced 1.329 million tonnes of primary aluminium, which marked an increase of 5.56 per cent from 1.259 million tonnes during the corresponding period of the earlier year.
The daily average production of alumina in North America was 11,000 tonnes during April 2024, slightly up from 10,700 tonnes a year ago but remained unchanged M-o-M despite a drop in monthly output.
Similarly, primary aluminium output in South America also registered a month-on-month downfall and a year-on-year growth during April 2024. According to IAI, South America’s primary aluminium production in April was 123,000 tonnes, down by 3.15 per cent from 127,000 tonnes in March 2024 but up by 4.24 per cent from 118,000 tonnes in March 2023.
Total production from January to April 2024 was 497,000 tonnes, up by 4.85 per cent from 474,000 tonnes during the same period of the previous year.
South America’s daily average production in April 2024 was 4,100 tonnes, essentially unchanged from the previous month but up by 5.13 per cent from 3,900 tonnes in April 2023.
Other major news of the week:
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