SHANGHAI, Jan. 17 (SMM) – According to SMM’s most recent survey of domestic aluminum plate, sheet, strip and foil producers, inventories of raw materials remained unchanged at half of the surveyed producers in December, were up at 30% of the producers and down at the remaining 20%.
Downstream processors have not yet begun aggressive restocking even as Chinese New Year approaches for two reasons. First, aluminum processors used to take a one-week break during Chinese New Year in the past years, but most will suspend production for half a month or even longer this year, resulting in limited demand for massive stock rebuilding. Second, payment period from end-users is extended and most of the payment is on an acceptance basis, so cash flows remained tight at most producers. As such, producers were forced to slash operating costs by reducing the days for raw material restocking. SMM data indicates that only 30% producers reported a MoM increase in raw material inventories.
Besides, heavy rains and snows in many regions hampered shipment of goods, causing raw material inventories to drop at 20% producers.