Operating rates across secondary aluminium makers jumped to 47% in March

SHANGHAI, Apr 17 (SMM) – Operating rates in China’s secondary aluminium industry rebounded 29.2 percentage points from a month ago to 47.32% in March, 16.37 percentage points lower from a year ago, according to SMM estimates.

Resumption of large-and-medium scale producers was the major driver behind the higher operating rates, while small companies grappled with the shortage of aluminium scrap and recovered at a slow pace. Some small plants reduced output or suspended in early April. SMM survey showed that overall sales in the secondary aluminium industry in March were 70-80% of the level during the same period last year. 

The operating rates will likely slip to around 45% in April as an intensified shortage of feedstock scrap and decreased demand amid the coronavirus crisis grew pessimistic prospects for production. 

In March, large amounts of backlogged orders and stockpiles before the Chinese New Year holiday supported operations of secondary aluminium plants, even in the face of the coronavirus impact on demand and disrupted supply chain. Only a handful of companies wound down production due to raw materials shortage last month. 

Demand has weakened both at home and abroad in April as an escalation in the COVID-19 outbreak outside China hurt exports and uncertainties around the macroeconomic development after the pandemic kept the demand outlook for cars and other durable goods grim. 

Aluminium scrap recyclers tended to hold cargoes back from the market after the steep declines in aluminium prices last month. This, together with supply disruptions of seaborne scrap amid the epidemic, constrained the availability of aluminium scrap in China and intensified supply woes. Some medium-scale and small companies have been compelled to halt production.