CHINA’S aluminum output surged in September to its highest in fifteen months as new and idled plants were fired up, threatening to undo this year’s rally in prices.

    The nation that accounts for more than half of world output churned out 2.75 million tons, up 1.2 percent from a year earlier and a third monthly increase, the statistics bureau said yesterday.

    It would also be the biggest volume since June 2015, according to International Aluminum Institute data.

    Smelters that had shuttered at the end of last year have returned to production to cash in on the rally, just as new low-cost capacity is also being brought online.

    The metal rose 15 percent on the Shanghai Futures Exchange through the first nine months and banks including Citigroup and Deutsche Bank warned of a retreat as output gains accelerate.

    “The smelters are coming back in a rush now, so that’s a concern,” said Paul Adkins, managing director of aluminum consultancy AZ China. “For the rest of this year, 2 million tons of annual capacity is guaranteed to come in and guaranteed not to exit.” That’s “going to put a lot of pressure on prices when we get to November or December onwards,” he said.

    Basic materials including aluminum and steel have increased this year on better-than-expected demand in China amid a credit splurge by the government to arrest economic slowdown, buoying markets from multi-year lows. (SD-Agencies)