SHANGHAI, May 13 (SMM) - The average operating rate of Chinese aluminium plate/sheet and strip producers stood at 76.7% in April, down 2.52 percentage points month on month and 2.86 percentage points year on year. The pandemic extended into April, making it more difficult for companies in east China to purchase and ship goods. Some companies were shut down due to shortages of raw materials and financial pressure. The closures of downstream enterprises in east China, a major consumption area, resulted in a decline in the production and sales of some aluminium plate/sheet and strip enterprises in Shandong and Henan. Many companies reported a sharp decline in their export orders. Overseas customers were worried about the transportation efficiency in China and chose to purchase from other countries. In addition, with the recovery of production at overseas enterprises, the dependency on Chinese products declined. The sharp drop in demand prevented the conversion margins of aluminium plate/sheet and strip from rising.

Entering May, the pandemic situation in east China has eased significantly when compared with April. Many companies believe that their production and orders will pick up in May-June with the recovery of transportation and downstream production, accelerated construction of infrastructure projects, as well as improvement of consumption. Following capacity expansions in recent years, the Chinese aluminium plate/sheet and strip market may shift to oversupply if overseas demand declines in the future.