Operating rates across major aluminium processor recovered slightly during peak season

SHANGHAI, Sep 7 (SMM) — Operating rates across major aluminium processors climbed 0.2 percentage point on a weekly basis to 77.4% last week. Producers of aluminium plate/sheet, strip, foil, primary and secondary aluminium alloy are optimistic over demand in September, but remain cautious about the demand recovery. Orders from automobile, construction, electronics and packaging sectors have improved, while orders at extrusion, wire and cable producers failed to increase. Operating rates are likely to continue to increase slightly this week.   

Aluminium plate/sheet and strip: Producers are optimistic over demand in September. Export orders improved slightly, while domestic demand remains the major driver. Orders for construction plates and PS printing plates improved, but orders for can stock increased at a much slower rate when compared to mid-August.

Aluminium foil: Producers expect stronger demand and higher operating rates in September than in August. Orders for air-conditioner foil fell sharply following the peak season, while orders for brazing foil, electronics foil and container foil improved slightly. Demand for light-gauge soft packaging foil remains strong. Steadily falling aluminium prices prompted end-users to delay the pick-up of goods, lifting finished product inventories at aluminium foil producers.    

Aluminium wire and cable: Operating rates are likely to decline in September and most producers take a neutral stance towards near-term demand. Recent tenders from State Grid were limited. Most producers pin their hopes on the possibility of accelerated power grid construction following the autumn farming season in September.

Aluminium extrusion: Operating rates across large producers are expected to remain largely stable in the short term. Large producers shortened their production schedules as orders on hand decreased slightly and received fewer new orders than expected. Exports recovered slightly. Sharp declines in aluminium prices attracted extrusion producers to stockpile on Thursday and Friday. Slow construction in the infrastructure and real estate sectors affected orders and cash flows at some producers. Most of the producers see stable output in September when compared to August.   

Primary aluminium alloy: Operating rates at large primary aluminium alloy producers fell 5.5 percentage points from a week ago to 59.2% last week as some producers adjusted product portfolio. A producer in north China reduced output of A356.2 aluminium alloy in favour of more lucrative A00 aluminium. Operating rates are expected to stabilise this week. A majority of primary aluminium alloy producers and aluminium wheel plants see slight increase in consumption in September. 

Secondary aluminium alloy: Operating rates at major secondary aluminium alloy producers increased 5.3 percentage points last week, largely driven by producers that rely on imported aluminium scrap who stepped up production on the back of increasing domestic and export orders. Most of the producers are optimistic over demand during the high season. Demand from car part plants recovered and is likely to grow significantly in the high season. Most secondary aluminium producers are storing aluminium ashes at their own warehouses, except for a few producers that are qualified to handle such hazardous wastes.