SHANGHAI, Feb. 20 (SMM) – Most Chinese aluminum extrusion producers suspended production after entering February. SMM believes domestic aluminum consumption will not recover until March at the earliest.
Aluminum extrusion producers, who used to resume production on January 8 of the lunar calendar, will not come back online until the 10th of the lunar January this year. What’s more, most producers are unable to operate at full capacity due to poor orders and a shortage of labor force following the Chinese New Year holiday. SMM survey found that operating rates at aluminum extrusion producers were 33% in February.
Unlike aluminum extrusion producers, most producers of aluminum plate, sheet, strip and foil remained online during the week-long holiday, while some small and medium enterprises closed for maintenance. As such, operating rates at aluminum plate, sheet, strip and foil producers swung less violently than those at aluminum extrusion producers in February, but still declined due to the Chinese New Year holiday, down to 45%.
To sum up, three factors will hamper recovery in aluminum consumption. First, aluminum extrusion producers took a longer holiday during this year’s Chinese New Year. Second, it takes time for producers to recruit enough workers and conduct training for new workers. Third, domestic end-users have not yet begun large-scale restocking. SMM thus believes domestic aluminum consumption will not show clear signs of pickup until March.