SHANGHAI, Jan 12 (SMM) - The average operating rate of aluminium extruders stood at 36.5% in December, 2022, down 1.4 percentage points month-on-month and 14 percentage points year-on-year, SMM survey showed. The average operating rate of large enterprises was 37.8%, medium-sized enterprises 35.8%, and small enterprises 20.5%. The average operating rate in the construction aluminium extrusion sector dropped 1.7 percentage points MoM to 32.6%, 18.6 percentage points lower than in the same period of the previous year, while that in the industrial aluminium extrusion sector fell 1.3 percentage points MoM and rose 2.2 percentage points YoY to 52.3%.
In December, the average operating rate of aluminium extruders declined for seasonal factors. On the one hand, the Chinese New Year of 2023 will arrive earlier than usual, thus the demand from terminal sectors led by the real estate sector in north China fell declined rapidly. In response, aluminium processing enterprises began to cut production and plan holidays as early as December. By the beginning of January, all the construction aluminium extruders in the north had basically stopped production. On the other hand, the shock wave caused by the abrupt relaxation of national covid-19 control in December resulted in delayed orders and personnel absence in many aluminium extrusion processing companies. The output and operating rates were affected, though the overall impact had basically faded away in late December. In terms of industrial aluminium extrusion, although a small number of companies also cut their production seasonally, most still maintained normal operating rates. In particular, the orders for lightweight automobiles and photovoltaic-related aluminium extrusion thrived, and thus many leading companies planned to ran at full capacity during the CNY holiday.
The raw material inventory/output ratio of aluminium extruders was 26.7% in December, up 7.2 percentage points from the previous year. The increase in raw material stocks was attributed to restocking demand from enterprises to take early holidays. At the same time, the orders for January slipped due to the holiday, further lifting the raw material inventory/output ratio. In terms of finished product inventory, similarly, some companies increased their finished product inventory in December so as to have more leeway to deliver orders after the holiday. As a result, the finished product inventory/output ratio in December stood at 39.4%, an increase of 11.6% year-on-year.
(Notes: Raw material inventory/output ratio=raw material inventory/expected output for next month; finished product inventory/output ratio=finished product inventory/output in the current month.）
On the whole, in December, the aluminium extruders across the country entered a pre-holiday off-season in December as a whole. In detail, the construction extruders saw large-scale seasonal reductions, and the reduction of those in north China was sharper. As for the industrial extruders, the operating rates of some top-tier enterprises, automobile extrusion producers and photovoltaic extrusion producers were relatively stable. In early January, most enterprises across the country are gearing up for the holidays, and the overall stocking volume is lower than in previous years for two reasons. First, the downstream processing enterprises are still uncertain about the economic development for the coming year. Second, the processing fees have been squeezed in the current market, narrowing the profits of producers significantly. Therefore, these enterprises, for a fear of wild fluctuations in aluminium prices, have become more cautious and mainly stockpile based on rigid demand. The average operating rate of aluminium extrusion producers in January is expected to continue falling sharply as most of the companies will be closed for holiday.
