Operating rates at secondary aluminium plants continued to decline in May

SHANGHAI, Jun 23 (SMM) — Operating rates at secondary aluminium producers stood at 59.56% in May, down 5.44 percentage points month on month, but up 10.87 percentage points year on year. Operating rates fell across small and big secondary aluminium plants in May. On demand, aluminium prices stood at high levels.

The average price of ADC 12 was above 19,000 yuan/mt. Losses at die-casting companies purchasing spot cargoes expanded to around 2,000 yuan/mt in early May. Many companies cut output against losses. Aluminium prices fell in mid May but downstream buyers stood on the sidelines and purchased as required.

The lack of chips used in automobiles and weak demand from automobiles weakened demand at die casting companies. Orders slid sharply and output declined in May.

On the supply side, available aluminium scrap in the market remained in deficit and some secondary aluminium plants reduced production amid raw material issues. In Guangdong, orders fell slightly due to the power curtailment policies and the spread of the pandemic, lowering output.

Prices of ADC12 dropped to around 18,500 yuan/mt in June. Many traders were bearish and sold at lower prices. Trades were lacklustre as demand weakened further. With the onset of the traditional off-season, operating rates in secondary aluminium industry should continue to decline in June.