Pessimism over sales to suspend Chinese automakers in Jul

SHANGHAI, Jul 5 (SMM) – SAIC Volkswagen Automotive, a Sino-German joint venture between SAIC Motor and the Volkswagen Group, will suspend three plants at its headquarters in Shanghai Anting in the first week of July and resume one by one from the second week, suppliers to the company told SMM.

This is expected to impact daily output by 2,500 units, likely for two weeks.

SMM also learned that this is not a traditional summer break, which typically occurs in July-August.

Another automaker headquartered in Hebei Baoding, Great Wall Motor, will also have a similar break, and has ordered its suppliers not to stockpile after trial production of automotive molds and dies for models under the new vehicle emission standards in the month ended July 15.

Automakers slowed production in anticipation of weak consumption in the coming months. Greater sales promotion to clear inventories of vehicles under National 5 emission standards, before the new standards kicked in, in certain Chinese cities from July 1 has frontloaded potential purchases in July-August, which is a traditional low season for auto sales.   

Slower car production is set to weigh on the secondary aluminium sector, as automobiles are major consumer of such materials. Prices of secondary aluminium continued to trend downwards in recent months.

Aside from weaker demand, firm costs are also squeezing margins across secondary aluminium producers due to fewer supplies of aluminium scrap.

Chinese secondary aluminium producers will face a tough summer as the yuan is devalued and a greater influx of seaborne materials arrive.

Demand for secondary aluminium is expected to pick up after August as auto production returns to normal and as the 5G economy encourages replacement.