SHANGHAI, Feb 12 (SMM) – Operating rates across Chinese processors of aluminium plate, sheet, and strip are likely to fall to 65% in January, down three percentage points from the revised reading in December as CNY breaks affected operation. 

On a yearly basis, operating rates in January are expected to decline two percentage points, SMM research found.  

Some processors started their CNY holiday as early as on January 20, and this reduced the average operating rate in the industry. Processors will mostly resume during February 8-14. 

While some large firms with annual capacity above 150,000 mt maintained stable operation during the holiday, year-end maintenance on equipment affected their production by up to three days. 

Suspended logistics ahead of CNY buoyed delivery costs, and this also capped production at those processors.

For 2019, overcapacity is likely to continue in the aluminium plate, sheet, and strip processing industry. 

Most processors remained optimistic about production in March given current unfulfilled orders. SMM learned that downstream orders from the construction sector picked up, orders from metal packaging held stable, while electronics weakened in the low season. 

In January, the ratio of raw materials inventory to the estimated output at those processors for February stood at 15.3%, compared with December’s 11.8% as processors stockpiled for CNY. High in-plant inventories of raw materials are likely to ease from February 10. 

The ratio of finished products inventory to the same month output in January came in at 40.9%, up from 39.2% in December.