SHANGHAI, Sep 13 (SMM) - In the first half of this year, the overall operating rates of molten aluminium casting billet enterprises across China were relatively stable. However, in July and August, the operating rates fell due to the decline in orders from downstream aluminium extruders, another round of outbreak of COVID-19, and power rationing in some areas. 
According to SMM survey, the average operating rate of domestic molten aluminium casting billet enterprises stood at 67.84% in August, down 3.51 percentage points from July. 
In terms of different regions, the decline was mainly contributed by central east, and south-west China. 

The average operating rate in east China fell by 6.47 percentage points. Poor demand in Shandong drove many local billet factories and traders to transfer their cargoes to Jiangsu, Zhejiang and other regions. In addition, due to the rising prices of silicon metal and magnesium, the costs of aluminium billets have risen, forcing many billet plants to reduce production. 
The average operating rate in central China lost 11.19 percentage points. This was mainly dragged down by producers in Henan, where falling conversion margins and pandemic-induced lockdown of extruders led to output cuts by billet plants.   

The average operating rate in south-west China dropped 7.34 percentage points as power rationing in Sichuan had a great impact on local aluminium smelters and billet producers. Although the power rationing was lifted in late August, it took time for smelters to restart their electrolytic cells, thus local billet plants were still closed. It is expected that the impact will not subside until the end of September. 

In addition, some billet plants in Inner Mongolia were affected by local safety inspections. 

In contrast, aluminium billet output in Guangxi and Yunnan rose steadily, and will maintain the upward trend thanks to capacity transfer from other regions.  
Given aluminium extruders’ pessimism over the market outlook in September and October, the overall operating rates are expected to fall further this month.