Poor construction demand lowers operating rates at aluminium extrusion producers in Jan

SHANGHAI, Feb 20 (SMM) – Continued weak demand from the construction extrusion sector lowered operating rates across some 50 Chinese aluminium extrusion manufacturers in January, SMM research found.

In January, surveyed manufacturers operated at 49.02%, down 5.67 percentage points from December, but up 1.12 percentage points from January 2018. 

The operating rate for construction extrusion registered 47.23%, down from a high of 63.69% in June 2018, pressured by lower readings in completed buildings’ floor space. In 2018, the floor space of completed buildings in China declined 8.48%, or 79.36 million m², from 2017. 

The rate for industrial extrusion edged down from 59.77% in December, to 58.75% in January. Stable demand from aluminium formwork and the solar industry limited declines. 

Operating rates across large manufacturers, with an annualised capacity above 100,000 mt, slid 4.42 percentage points from December. On a monthly basis, the rate across medium-sized manufacturers, with a capacity of 30,000-100,000 mt, fell sharply by over 10 percentage points, and that across small ones, with a capacity below 30,000 mt, increased significantly. 

An update in the sample accounted for the increase in operating rate for small mills, while fewer downstream orders resulted in significantly lower rates across medium-sized manufacturers. 

Maintenance and cash settlement drove some producers of aluminium extrusion to take breaks from mid-January ahead of the Chinese New Year holiday, and this also weighed on overall operating rate in the industry. 

For February, CNY closures and a bearish outlook on downstream orders will likely to extend decline in the operating rate. However, some manufacturers believed that consumption will pick up in March-May given national support on infrastructure and the solar industry.