Competition in A356 Alloy Market Intensifies

SHANGHAI, Apr. 24 (SMM) – Trade companies entered alloy market by virtue of their abundant funds, intensifying competition in A356 alloy market.

SMM survey found that A356 alloy output at surveyed producers totaled 102,500 mt in April, up 1,500 mt MoM. Operating rates also rose 0.78% MoM to 53.11%.

Five alloy producers in Shandong and Inner Mongolia saw their output decline due to falling demand from production cuts at aluminum smelters and adjustment of product portfolio. On the other hand, another three producers reported increases in output, offsetting decreased supply from falling output.

Alloy purchases by wheel factories were stable as their orders increased on a year-on-year basis. Generally speaking, supply and demand of alloy were basically balanced, allowing alloy processing fees to stabilize at RMB 600-650/mt as well.

Instead of buying alloy from alloy producers, small wheel factories in Ningbo and Shanghai produce alloy by themselves now that primary aluminum and silicon metal prices are low at the moment. More and more trade firms are competing with alloy producers by extending payment terms, highlighting tightening liquidity confronted by alloy producers and wheel factories.