SHANGHAI, Jul 21 (SMM) – In June, the average operating rate of China’s secondary aluminum industry fell 0.7 percentage point to 48.0% from May, with a decrease of 4.3 percentage points year on year, showed an SMM survey.

The month-on-month downtick in operating rates was due to increased arrivals of imported aluminum alloy ingots in June. The operating rate of the secondary aluminum industry is expected to remain stable in July.

There was no significant change to domestic and foreign demand in June. Weak downstream demand and the influx of imported aluminum alloy ingots have emerged as the major factors affecting operations at secondary aluminum producers who had been beleaguered by scrap shortages.

The decline in domestic demand in July following the onset of a slack season is expected to be limited from May and June when operations across the secondary aluminium industry were already at lows. Operations are also likely to be supported demand recovery overseas as the revival in the major buyer—Japan—will increase exports from China and lift prices overseas, helping cushioning the hit from imports. Operations across Chinese secondary aluminium producers are likely to hold steady in July, even as they have lowered their sales targets.