SHANGHAI, Jun. 23 (SMM) – Average operating rate at domestic aluminum plate/sheet, strip and foil (FRP) producers is expected to slip to 61% in June, Shanghai Metals Market foresees.
The arrival of off-season and liquidity crunch are main reasons behind the drop, SMM understands.
Tightening mid-year liquidity and poor orders are deterring aluminum fabricators from stockpiling raw materials in appreciable quantities, but their finished goods inventories are growing higher, the SMM survey
With cash squeeze biting in, fabricators rejected orders from those customers that delay payments for too long, causing finished goods inventories to grow.
Besides, some banks in Henan and Shandong are offering credit on the condition that local aluminum fabricators do not cut output aggressively or halt production, also contributing to higher finished goods inventories.