Aluminium foil companies maintained low inventories, food packaging foil to be a new bright spot

SHANGHAI, Jun 17 (SMM) – The average weighted operating rate of Chinese aluminium foil producers was 87.08% in May, down 1.21 percentage points month on month, but up 3.22 percentage points year on year.

Aluminium prices continued to trend higher in early May. Large-scale aluminium foil producers raised processing fees, small and medium-sized enterprises rarely increased the processing fees amid the worries about losing customers. Part of the small and medium-sized plants suspended order accepting amid the shortage of funds.

Aluminium prices fell from 20,000 yuan/mt to 18,000 yuan/mt in mid-to-late May, and downstream customers were not enthusiastic about picking up goods. Aluminium foil companies mostly held a cautious outlook and still controlled their inventory at a low level, but the inventory of finished products is difficult to control due to customers' inactive delivery.

The decrease in aluminium prices drove some small and medium-sized enterprises that had previously suspended production to return to the market. The high season of air-conditioning foil was coming to an end, and food packaging foil is expected to become a new bright spot. Large-scale aluminium foil producers boasted full orders amid high season in June, with their production scheduled until August. Operating rates across aluminium foil plants are expected to increase to about 88% in June.