China has been the one to watch for both steel and base metals for much of the last decade as the country’s rapid industrialization has sucked in raw materials and refined metals to the detriment of consumers everywhere.

Indeed, much of the current negativity around prices has been due to expectations of slower growth in China this year.

So when the (admittedly somewhat unreliable) National Bureau of Statistics (NBS) data is released, it causes quite a stir in the markets.

Andy Home of Reuters tried to assess what the numbers were telling us in a recent article, with the caveat that it is safer to look at trends than absolute numbers as the NBS data is often subject to revision and sometimes to changing collection criteria that is not always apparent when the data is first released.

Surprisingly, for a metal that is in global surplus and which, we are told, Chinese manufacturers are struggling to make pay, the country added substantial new aluminum production capacity in the first quarter. According to Home, combined production over January and February rose by 15 percent year-on-year to 3.51 million metric tons, the fastest pace of expansion since 2010.

Moreover, February’s output of 22.55 million tons annualized was a fresh all-time record, numbers supported in the article by AZ China’s estimates of 4.3 million tons of additional capacity being added this year. So far, inventory build has not been as impressive in China as it has been in the West, but the SRB’s recent purchases suggest some smelters are struggling with overproduction in spite of demand growing along with GDP.

Interestingly, the import market for copper is undergoing something of a transformation from refined metal to concentrates. Production of refined copper was up 11.9% over the first two months of this year, the fastest rate of increase, Reuters says, since 2010, driving concentrate demand and building on accelerating imports at the close of last year.

Source: SeekingAlpha