SHANGHAI, Mar. 27 (SMM) - Processing charges for A356 aluminum alloy in China are poised to rally in April as the peak-demand season arrives, Shanghai Metals Market foresees.
Output at A356 aluminum alloy producers surveyed by SMM totaled 113,750 tonnes in March, up 3,750 tonnes from February. Operating rates averaged 68.94%, also up 2.27% month-on-month. This created a supply surplus.
#441 silicon was offered at 13,500 yuan ($ 2,193) per tonne in Shanghai on March 26, and #3303 silicon was quoted at 14,200 yuan per tonne. Spot aluminum was offered lower at 12,380 yuan per tonne. This left a price spread of 1,200-1,800 yuan per tonne between silicon and the light metal, translating into a 100 yuan per tonne increase in production costs at alloy makers. Growing production costs, however, did not offer cost support to processing fees of A356 aluminum alloy, which fell from 680 yuan per tonne to 650 yuan per tonne, dragged down by an overhang of the metal.
Operating rates at A356 aluminum alloy makers are expected to fall should the high price gap between silicon and aluminum persist. Many alloy makers have cut production or postponed plans to step up production, which should ease current oversupply somewhat. Meanwhile, April marks the arrival of the normally peak-demand season. In this context, processing charges for A356 aluminum alloy look set to rebound.