Aluminum prices on the London Metal Exchange (LME) ended last week on a strong note, driven by optimism over China’s economic recovery. The boost follows a series of government stimulus measures over recent months, aimed at revitalizing the economy. China's 2024 GDP growth reached 5%, meeting government expectations, with the final quarter posting a robust 5.4% increase—the fastest growth in six quarters, according to ING commodity analysts Warren Patterson and Ewa Manthey.
China's Aluminum Production Climbs
Data from the National Bureau of Statistics (NBS) revealed a 4.2% year-on-year (YoY) rise in China's primary aluminum production, totaling 3.8 million tons in December 2024. The growth was fueled by new production capacity additions in Xinjiang. Cumulatively, aluminum production increased by 4.6% YoY to approximately 44 million tons in 2024. While aluminum output expanded, crude steel production showed mixed results. December's steel output rose 11.8% YoY to 76 million tons, but cumulative annual production fell 1.7% YoY to 1,005.1 million tons, marking a five-year low due to ongoing property market challenges.
Base Metal Inventory Trends
Weekly inventory data from the Shanghai Futures Exchange (ShFE) showed declining aluminum stocks, which dropped by 3,694 tons to 178,474 tons last Friday—the lowest level since February 2024. Zinc inventories also fell for the ninth consecutive week, declining by 294 tons (-1.4%) to 21,040 tons. Lead inventories dropped by 1,351 tons to 43,503 tons. Conversely, copper and nickel inventories experienced weekly increases of 12.9% and 5.2%, respectively.
With China's economic recovery gaining momentum, aluminum continues to benefit from increased production and declining inventories, solidifying its position in the global metals market.
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