SHANGHAI, Mar 2 (SMM)—SMM has surveyed 41 aluminium processing enterprises across 12 provinces. Operating rates across major aluminium processors increased 19 percentage points from a week ago to 60.1% last week. Aluminium building materials and aluminium wire and cable producers were less active in resuming production due to limited orders. Most large-scale enterprises resumed normal operations last week, while small and medium-scale enterprises reported low efficiency of production resumption as they had stockpiled fewer raw materials before CNY and took a wait-and-see stance when aluminium prices rose sharply. Operating rates at aluminium processing companies will gradually return to a normal level this week. Even aluminium scrap recyclers, who resumed the latest, will gradually begin normal shipments this week.
Primary aluminium alloy: The operating rate of primary aluminium alloy producers was stable as producers digested inventories that accumulated during CNY. Aluminium wheel factories resumed production after the holiday, and are expected to resume pre-holiday level this week. Some primary aluminium alloy producers delayed purchases due to high aluminium prices. Some primary aluminium alloy enterprises will slightly increase their operating rates this week due to the recovery of orders.
Aluminium plate/sheet and strip: Operating rates at major aluminium plate/sheet and strip enterprises increased. Producers in our survey sample maintained normal production during CNY. Logistics recovered earlier than expected. The sharp rise in aluminium prices stimulated end-users to pick up cargoes and place orders more actively. Most of the large producers have two months of orders on hand. For small and medium-scale producers, orders are full, but there are not too many backlog orders. Producers are under great pressure to deliver orders from the automobiles, consumer electronics, and military industries. Supply of cast-rolled coils and aluminium foil billets is in shortfalls. Some producers plan to add or restart melting and casting, cold rolling, and hot rolling capacities.
Aluminium wire and cable: The operating rate of major aluminium wire and cable companies increased 10 percentage points from pre-holiday level last week. Producers in Jiangsu and Zhejiang produced normally to deliver previous orders. Major producers signed contracts that are linked to raw material prices so as to reduce the risk of soaring raw material prices. Given the high aluminium prices, producers may be less active in production this week.
Aluminium extrusion: Operating rates at major aluminium extrusion enterprises recovered significantly from the last week before CNY. Operating rates at industrial extrusion producers continued to outperform those at construction extrusion producers due to strong orders. Orders at some large-scale industrial extrusion producers are scheduled until the end of March. Most infrastructure projects remained closed, leaving demand for construction extrusion weak. Some producers expect demand to recover after February 26. The surge in aluminium prices turned extrusion producers and end-users cautious about placing and taking orders. It is expected that the growth rate of operating rates will increase this week.
Aluminium foil: Operating rates at major aluminium foil enterprises were basically flat last week. Logistics recovered after CNY, allowing finished product inventory to decrease. Domestic demand for automotive foils, battery foils, and air-conditioning foils remained strong. Rising aluminium prices drove some downstream customers to place orders in advance. Large enterprises will maintain full production this week. Most small and medium-scale enterprises will be less active in production as failure to stock up raw materials before CNY eroded their profits.
Secondary aluminium alloy: Operating rates at major secondary aluminium alloy companies rose 19.2 percentage points to 51.9% as most companies started normal production after CNY. Most producers resumed production around February 18, and some large enterprises remained open during CNY. Some producers resumed production after February 26. Aluminium scrap suppliers began to resume supply last week, but rising aluminium prices left them reluctant to sell, leaving raw material supply tight for secondary aluminium companies. Die-casting plants chose to work through stockpiles stocked up before CNY and showed little interest in placing orders due to high aluminium price, while secondary aluminium companies were unwilling to sell at low prices. However, orders will increase after die-casting plants run out of inventories this week. It is expected that secondary aluminium enterprises will resume production fully this week, and the operating rate will continue to rise.
