China’s aluminium processing industry picks up growth in Sep

SMM Insight 03:39:33PM Sep 30, 2018 Source:SMM

SHANGHAI, Sep 30 (SMM) – China’s aluminium processing industry returned into expansion territory in September, bolstered by improvement in primary alloy, secondary alloy, foil, plate/sheet and strip, construction extrusions sectors, SMM research found.

The purchasing managers’ index (PMI) across seven sectors in China’s aluminium processing industry, released by SMM on Sunday, rebounded to 51.1 in September from 49.6 in August. A reading above 50 indicates expansion, while a reading below that signals contraction.

A production sub-index, viewed as a proxy for operating rates, increased to 51.4 in September from 50.5 in August, while a new orders sub-index fell to 47.7 from 49.5.

New export orders saw growth this month, with the sub-index climbing to 51.4 from 37 a month ago.

While September is a traditional high season, the plate/sheet and strip sector remained in contraction territory at 48.9, slightly up from 46.7 in August. Orders were sluggish across this sector, but export orders for packaging, bottle caps, heat transfer materials, heavy and medium plates improved.

The construction extrusion sector showed similar performance with its September PMI standing at 48.5, compared to 47.4 in August. Orders that large producers received held steady while small and medium-sized ones saw declines in production and sales. Tight cash flows jeopardised demand from property. Demand shrinkage was also seen in the countryside and shanty town redevelopment.

Foil producers continued to operate at high levels in September with the PMI across the sector jumping to 56.1 from 43.9 in August.

The industrial extrusion sector saw a sharp decline in orders in September with the PMI flipping into contraction territory, from 57.4 to 48.2. Orders for rail extrusion were moderate while those for vehicle extrusions failed to continue their improvement.

Activity in the cable wire sector failed to continue its strong performance and contracted in September. The PMI at this sector came in at 48.6, sharply down from 62.4 in August. While September is a traditional high season, the sub-index on production stood at only 49.7 as orders at some producers dwindled. Export orders to the US shrank, impacted by Trump’s new tariffs on $200 billion worth of Chinese goods, while orders to other countries grew as export rebates on aluminium strand were raised up to 16% from 13%.

Some primary aluminium alloy producers saw increases in their production and sales in September with the PMI inching up to 58.8 from 57.7. But actual demand didn’t grow and backlog orders decreased.

PMI for the secondary aluminium alloy sector jumped to 71.9 in September from August’s 44.9 as orders improved after downstream consumers recovered their operation from summer break.

Key Words:  Aluminium   PMI