SHANGHAI, Jun. 3 (SMM) - A356 alloy supply in China fell in May due to production cuts at three producers, but remained in slight surplus, which lent no support to processing fees. 

SMM’s most recent survey found that A356 alloy output in May totaled 110,500 mt, down 3,000 mt from April. Operating rates also fell 1.56% MoM to 57.25%.

Aluminum smelters in Zhejiang province cut production, causing alloy output to drop. Inferior aluminum liquid quality at one aluminum smelter in Shandong province also sent alloy output in neighboring regions to fall. One aluminum smelter in Inner Mongolia sold alloy production lines against losses. 

Despite a 2,000 mt monthly increase at one producer in Shandong province, alloy output still slipped from the previous month. 

On the demand side, orders from wheel factories were stable. Some wheel factories are producing alloy by themselves due to lower silicon metal prices. Processing fess of A356 alloy for delivery to factory remained between RMB 600-650/mt.  

Most alloy producers believe price competition will remain intense and processing fees will remain low. SMM believes abundant supply against stable A356 alloy consumption will further intensify price competition.