[SMM analysis] the start-up rate of the aluminum sheet, strip and foil industry rose slightly in August from a month earlier, and is expected to continue to warm up in September.

SMM, Sept. 11 / PRNewswire-Asianet /-

SMM completed a survey on the operating rate of domestic aluminum strip and foil enterprises in August. The operating rate of aluminum strip and foil enterprises in August was 72.71%, an increase of 0.74 percentage points over the previous month and 3.68 percentage points from the same period last year. From the perspective of enterprise scale, the start-up rate of large aluminum sheet, strip and foil enterprises in August, medium-sized enterprises and small enterprises are 79.96%, 45.84% and 37.61%, respectively. According to the type of enterprise, the start-up rate of aluminum sheet and strip enterprises is 70.37%, and that of aluminum foil enterprises is 83.48%. (figure 1, 2) it is expected that the opening rate of plate, strip and foil enterprises will continue to warm up in September, rising to 75%.

Figure 1. Details of operation rate of Chinese plate, strip and foil enterprises

Figure 2. Monthly operating rate of aluminum sheet, strip and foil enterprises

According to the first-hand survey data from the end of August to the beginning of September, the average weighted operating rate of China's aluminum plate and strip industry in August was 70.37%, up nearly 1 percentage point from the previous month and nearly 4 percentage points from the same period last year. The operating rate is expected to continue to rise slightly in September. From the point of view of the order situation, the average scheduling period of the stock order of aluminum plate and strip enterprises from the end of August to the beginning of September is about 18 days, which is 2 days higher than that of the same period last month, in which the beverage packaging is in the green and yellow season. After the peak consumption season of cold drinks in summer, the second batch of orders prepared for Spring Festival consumption have not yet been released. Automotive materials experienced June, July, August off-season, there are signs of improvement in orders, but there are no obvious signs of replenishment downstream, automotive material orders reflected in the aluminum strip factory may be in late September, according to automotive materials finishing enterprises reflect, the order in the second half of the year is not expected to be worse than the first half of the year; orders for construction materials have also recovered, but with the deterioration of foreign trade exports, domestic trade ordinary strip market competition is more intense. Feedback to September production forecast: order improvement is limited, although Henan aluminum strip involves environmental protection and production restrictions affecting melting and casting production, but external procurement of casting and rolling coil can be used instead of self-produced billet. To sum up, production is expected to increase slightly in September compared with the previous month, and many other enterprises also have expectations for October production.

Inventory: raw material inventory continues to fall, mainly due to rising aluminum prices and tight funds, conditional hoarding of goods is not many enterprises, but it is true that some enterprises have increased raw materials or plan to increase raw materials; finished goods inventory decline, also due to high aluminum prices, enterprises take the initiative to ship to the warehouse.

Export: export orders are still not optimistic, mainly in the month-on-month decline.

In August 2019, the opening rate of aluminum foil enterprises was 83.48%, up 0.42% from July, down 2% from the same period last year. The aluminum foil industry continued in the off-season in August, with production up slightly from July. From the point of view of product categories, the output and orders of double-zero soft foil dropped slightly compared with the previous month, and the market competition was very fierce. Only a few enterprises increased the output of double-zero foil in August compared with July. Household foil performance in aluminum foil products is the weakest. SMM survey related production enterprises mostly said that they entered the off-season from May this year, and the possibility of improvement of relevant orders in September was smaller, and the order fullness was weaker than that of the same period last year. In terms of air-conditioning foil, although the output in August is still at the off-season level, it has warmed slightly from the beginning of the month, contributing to the small increase in the opening rate of aluminum foil in August. According to SMM, downstream air-conditioning stocks are still high, so air-conditioning foil production rebounded significantly in September. According to the current SMM statistics of aluminum foil enterprise order days and enterprise feedback, it is expected that the starting rate of aluminum foil industry is expected to rise by 85% in September.

In terms of inventory, aluminum foil enterprises in August multi-rigid demand to purchase raw materials, there is no obvious reserve behavior, raw material inventory is maintained in 2 days to 15 days; most aluminum foil enterprises to maintain stable inventory of finished products, but SMM survey of individual enterprises due to the reduction of orders led to the decline of finished goods inventory.

On the export side, SMM research aluminum foil export orders continued to shrink in August compared with July, double zero, household foil products are particularly obvious, mainly due to weak foreign terminal demand and higher Shanghai-London ratio.

Figure 3. Stock ratio of aluminum sheet, strip and foil

Figure 4. Inventory ratio of finished products of aluminum sheet, strip and foil