SHANGHAI, Jun. 21 (SMM) – SMM’s survey of domestic aluminum extrusion producers found that operating rate at construction aluminum extrusion producers in May remained high at 74.17%. The operating rate at industrial aluminum extrusion producers was stable at 54.25%. SMM expects operating rates at both construction and industrial aluminum extrusion producers to fall in June.
Consumption by end users entered off-season earlier than expected in June. Growth of housing construction areas during January-May inched down 1.2 percentage points from January-April. Growth of new housing construction areas also edged down 0.9 percentage point. Areas of land bought by property developers fell 13.1% YoY. Many construction aluminum extrusion producers informed SMM that distributors opted to consume inventories at hand rather than build up stocks against slowing real estate and volatile aluminum prices. This cut into orders at aluminum extrusion producers. SMM thus anticipates a 3% decline in the operating rate at construction aluminum extrusion producers to 71% in June.
Orders at industrial aluminum extrusion producers were also poor. There has been no bid invitation for aluminum extrusion for use in bullet trains since 2009. Delivery to China South Locomotive & Rolling Stock Corporation Limited (CSR) was completed in March this year, and delivery to China North Locomotive and Rolling Stock Corporation Limited (CNR) is due this June. Both CSR and CNR are setting their sights on overseas markets, which also prove difficult to explore, though. Industrial aluminum extrusion producers that chiefly produce aluminum extrusion for rail use such as Conglin Aluminum are reporting poor orders this year. Sharply shrinking export demand caused by slowing global economy has driven China’s machinery manufacturing sector into surplus, eating into demand for industrial aluminum extrusion. Hence, SMM predicts that the operating rate at industrial aluminum extrusion producers will slip to 50% in June.