SHANGHAI, Oct. 24 (SMM) – SMM’s most recent survey of 16 A356 alloy producers found that total output at the surveyed producers were 110,000 mt in October and operating rates averaged 64.71%, down 1.17% MoM.

Production was unstable at A356 alloy producers in October. One producer in Inner Mongolia suspended production in October as excessive iron in aluminum liquid makes it unsuitable to produce A356. However, a Shandong-based alloy producer ramped up production of A356 alloy and cut production of 6063 alloy, given the cost-efficiency from low-priced silicon metal. This is also because downstream wheel industry of A356 alloy outperforms downstream aluminum extrusion industry of 6063 alloy.          

Processing fees of A356 alloy were RMB 600-650/mt in October, down RMB 50/mt from last month. Higher processing fees were also seen between RMB 650-700/mt for payment on an extended or acceptance basis. The low-end processing fees were RMB 550-600/mt, provided payment is made in full and cash.     

SMM has confirmed that supply of A356 alloy grew more than 20% YoY so far this year, but aluminum wheel output growth was less than 20% on a yearly basis. SMM thus expects A356 alloy processing fees to drop further, given little downstream buying interest from tight cash flows and mounting inventories at alloy producers.