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Destocking Wave Soars at Aluminum Plate, Strip & Foil Producers on Terminal Demand Plunge
Sep 28,2011 15:20CST
smm insight
Source:SMM
Disappointing sales for home appliance exposed producers to stock pressure and excessive capacity woes. The destocking wave has now spread into the aluminum plate, strip & foil industry.

SHANGHAI, Sept. 28 (SMM) – Disappointing sales for home appliance have exposed producers to stock pressure as well as excessive capacity woes. The destocking wave has now spread into the aluminum plate, strip & foil industry.

China’s “old-for-new” and “countryside home appliance” programs have failed to drive up home appliance sales starting from the third quarter, with sales volumes plunging. According to SMM surveys, sales volumes for a series of products including home appliances and machinery have slipped. Many home appliance chain-stores have missed their sales targets for 6 to 9 successive months. As such, the sales volume for home appliances in the “countryside home appliance” program dropped 4.4% YoY and 1.25% MoM in June.

Downstream order volumes at domestic aluminum plate, strip & foil producers have seen slips to certain extents at the moment. Meanwhile, widening SHFE-LME aluminum ratio has also led to a contraction in export orders. Operating rates at these enterprises have already dropped to recent lows.

Due to contracted order volumes, drastically fluctuating aluminum prices and remaining tight credit supply, purchases for raw materials have been reduced at aluminum plate, strip & foil producers for destocking purposes. With lower aluminum prices, a price war was started among some aluminum processors in Central China, which added to the market disorder. SMM expects sales for home appliances to remain poor in the future, leading to low stock building interest for aluminum plate, strip and foil at terminal producers. The destocking pace at aluminum processors during 4Q therefore will be limited.

aluminum Al

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