Seasonality slows operations at aluminium foil producers in Jul

SHANGHAI, Aug 19 (SMM) – Chinese manufacturer of aluminium foil further scaled back operations in July, as food packaging demand weakened in hot weather and as demand from air-conditioners was lowered by high AC inventories, weak production and sales at home and abroad.

An SMM survey showed that the average operating rate across aluminium foil producers in China fell for a second straight month, losing 4.77 percentage points from June to 83.06% in July. July’s reading declined 5.94 percentage points from the corresponding month of 2018.

Production of aluminium foil for household use further shrank last month, while that of aluminium foil used in electric products and batteries held stable.

Orders for food packaging remained downbeat in August, while the low season for AC foil is expected to continue into the start of September. Orders for household foil failed to stem the downturn in August.

Data from China Customs showed that China's exports of aluminium foil decreased by 7.29% month on month to stand at 115,900 mt in June, as a seasonal lull dented demand and as higher price ratios of SHFE/LME aluminium squeezed export profits. Aluminium foil exports rose 2.1% from a year ago in June.

SMM expects operating rates across aluminium foil producers to average 83% in August, as a low season continues. The rate is likely to pick up in September, as orders will improve after the weather cools down.