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How Are Aluminium Extrusion Companies Holding Up after Aluminium Prices Hit A 13-Year High?
Aug 23, 2021 13:41CST
Source:SMM
Aluminium prices have been moving all the way up since the beginning of this year.

SHANGHAI, Aug 23 (SMM) - Aluminium prices have been moving all the way up since the beginning of this year. The SMM A00 aluminium ingot spot price stood at 20,340 yuan/mt on August 18, a new high since 2008. The most-traded SHFE aluminium contract hit 20,575 yuan/mt on the same day, the highest in 13 years.

The followings are the results of SMM survey of aluminium extrusion companies.

Company A: It is located in Guangdong and specialises in the production of industrial extrusion, with an annual production capacity of about 50,000 mt. Orders from the automotive industry are stable, but orders from other sectors are sluggish. The current output is less than 4,000 mt per month. Orders will continue to fall if aluminium prices rise further, which will leave it with no choice but to reduce production. It holds bullish views on aluminium price outlook, citing the upcoming peak season and approaching dry season in Yunnan. 

Company B: It is also located in Guangdong and engages in the production of both construction and industrial extrusion, with an annual production capacity of 300,000 mt.  Its production schedules are only more than 10 days. Customers have stopped placing orders mainly due to soaring aluminium prices. It is currently operating at 90% of the full capacity. If aluminium prices stay stubbornly high, orders are unlikely to return to normal even in October, which will force it to cut output.   The National Development and Reform Commission recently released a list of nine provinces that have failed to meet energy consumption control goals, most of which are major aluminium production regions. This will be followed by specific measures by local governments to curb energy consumption, driving aluminium prices even higher. Aluminium prices are unlikely to pull back unless downstream producers reduce production significantly or aluminium production increases substantially, which are unlikely to happen in the foreseeable future.  

Company C: It is located in Shandong and is mainly engaged in the production of construction extrusion, doors, windows and curtain walls, with an annual production capacity of 200,000 mt. It has reduced production by nearly a quarter, and orders on hand could only sustain production for about 10 days. Output in August is estimated to be 1,000 mt less than that in July. The off-season and tightening policy in the real estate industry have hurt demand for construction extrusion. Despite poor demand, aluminium prices are unlikely to pull back as the carbon neutrality and energy consumption control policies have put a cap on new aluminium capacity. Aluminium prices are poised to hit new highs in September when the traditional peak season arrives.

Orders have fallen sharply across all sizes of enterprises, a different situation from half a month ago when large enterprises performed better than small and medium-sized ones, resulting in further output cuts. Majority of the aluminium extrusion companies surveyed by SMM remain bullish on aluminium prices in the short term, believing that the slow release of new aluminium capacity under energy consumption control policy and intensifying impact of power curtailment on aluminium supply will send aluminium prices up further. In addition, aluminium ingot social inventories are likely to reverse the current upward trend after the peak season arrives in September, also boosting aluminium prices.

aluminium extrusion

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