SHANGHAI, Mar. 14 (SMM) – Purchases of A356 alloy have returned to normal as aluminum wheel factories have resumed production following the Chinese New Year. However, processing fees of alloy for delivery to factory fell back.

SMM’s recent survey of A356 alloy producers found that output at the surveyed producers was 120,000 mt in February, down 5,200 mt from January. Operating rates were 62.18%, down 2.69% MoM.

Strong demand from wheel factories before the Chinese New Year pushed processing fees of alloy for delivery to the factory up to RMB 650-700/mt. However, alloy supplies were ample and downstream producers purchased on an as-needed basis after the holiday, sending processing fees for delivery to factory down to normal levels seen last year at RMB 600-650/mt. 

China introduced five new measures in 2013 to cool housing markets, eroding demand for aluminum. On the other hand, the auto sector, another major driver for aluminum consumption, was relatively stable. The Wheel Committee under China Association of Automotive Manufacturers predicts an over 5% growth in China’s aluminum auto wheel exports in 2013, a more than 5% increase in demand for aluminum auto wheels used in domestic automobiles as well as an over 10% rise in replacement demand for aluminum auto wheels.