Cast Aluminum Alloy Demand Little Affected by Lower Auto Sales in October

SHANGHAI, Nov. 14 (SMM) -- According to the China Association of Automobile Manufacturers (CAAM), China’s automobile production and sales were 1.25 million units and 1.11 million units during October, down 1.2% and 12.9% MoM. Although auto production and sales fell again after growing significantly in September, domestic sales of cast aluminum alloy were unaffected, with orders stable.

China has made qualifications more stringent for fuel-saving vehicle subsidies in October, which have a great impact on automobile sales in that month, and sales of some small-engine vehicles increased in September for enjoying the subsidies, which caused auto sales in October to drop. Domestic sales of cast aluminum alloy were stable in October, and overall operating rates at cast aluminum alloy producers even improved from September, since auto production posted limited declines despite significant decreases in auto sales. Automobile manufacturers shipped inventories to dealers at the year’s end in order to complete sales target, and their production did not fall significantly following sales, so demand for cast aluminum alloy from auto engine plants remained stable. In addition, time is needed for changes in auto production and sales to be felt by cast aluminum alloy demand, and many auto parts plants replenished raw material inventories in October, and their restocking also provided support for overall consumption of cast aluminum alloy.

In summary, SMM believes significantly lower auto sales in October did not have a significant impact on demand for cast aluminum alloy, but if auto sales remain weak during the remainder of 2011, the growth of cast aluminum alloy demand will likely be restricted.