Operating rates across secondary aluminium makers edged down in April

SHANGHAI, May 11 (SMM) – Operating rates across China’s secondary aluminium industry dipped 0.22 percentage point from a month ago to 47.08% in April, 11.22 percentage points lower from a year ago, according to SMM estimates.

The lingering impact of COVID-19 kept domestic and overseas demand subdued, weighing on operations of secondary aluminium smelters. Those producers saw limited increase in new orders after they fulfilled previous orders. This, together with a surge in China’s imports of aluminium alloy, also depressed the production of domestic secondary aluminium. 

Secondary aluminium producers remain pessimistic for operations in May as the crippling impact of the pandemic slows the resumption of demand. Demand from overseas consumers has dwin'dled in May.

The operating rates of Chinese secondary aluminium producers will edge lower in May, but the year-on-year decline will likely narrow from April as the rates for May 2019 also fell significantly due to decreased demand amid the destocking of cars with lower emission standards. 

The impact of aluminium alloy ingot imports on China’s secondary aluminium industry will be closely monitored in May-June as stagnated overseas demand amid the slow recovery of the foreign car market may drive the imports arbitrage win'dow to reopen.

SMM expects great amounts of aluminium alloy ingot to arrive in China between end-May and June as previous limited availability of aluminium scrap led to an increase in China’s import orders at end-April.