SHANGHAI, Jun. 17 (SMM) – Operating rates at Chinese aluminum extruders are expected to fall slightly during June, Shanghai Metals Market foresees.
The decline is due mainly to higher environmental protection requirements, tightening liquidity, labor shortages, as well as the start of a low-demand season, according to SMM’s analysis.
In addition to Guangdong province and east China, the provincial government of Shandong has now also imposed higher environmental protection standards on local aluminum extruders, showed by SMM survey
In face of stringent environment protection inspections, some producers are now increasing purchases of aluminum rod and have halted the use of melting and casting furnaces, which are major sources of pollution during aluminum extrusion production. Producers that failed to meet environmental protection standards were required to close.
Furthermore, aluminum extruders are also plagued by tightening cash flows due to the delay of payment by property developers and credit limits by banks. Some extruders are even pledging finished goods as collaterals to secure loans from banks.
Labor shortages during the summer months and the arrival of low-demand season will also drag down production at domestic extruders in June.