[Al] CBI Survey - Operating Rates at Aluminum Plate and Sheet Producers

SHANGHAI, July 27 (CBI China) -- A recent CBI survey of 25 aluminum plate and sheet producers (total capacity: 2.6007million mt/yr) revealed the following insights:

    1) Operating Rates

    Market players have been increasingly pessimistic with regard to aluminum consumption during the summer months due to the financial crisis and the seasonal low demand period. However, according to the survey, operating rates at the 25 domestic aluminum plate and sheet producers were 63.37% during June, up nearly 3% compared to May. CBI believes there are two reasons for this change.  First, government stimulus policies for infrastructure investments, the home appliance subsidy programs for rural areas, and subsidy program for automobile replacement have all had a positive impact on domestic demand, and helped stimulate aluminum consumption. Second, selected large and medium producers expanded production scale, helping reduce ex-works prices and increase orders. According to the survey, operating rates at large aluminum plate and sheet producers were higher than 65%, operating rates at medium producers fell slightly to 56.16%, while operating rates at small producers were below 50%, a signal of current fierce competition in the market. 

    2) Forecast of July Orders

    The survey reveals that most of producers were optimistic with regard to July orders.  Only 12% of producers, mainly small producers, believe orders will decline.  Over 50% of producers believe current consumption and orders will remain stable, and were optimistic towards 4Q consumption.  The final 28% of producers said July orders will be higher than June, and their output will also grow. CBI believes the series of economic stimulus policies from the Central Government have boosted aluminum consumption, since the real estate, automobile, and home appliance sectors are all performing better.  As aluminum prices continued to rise during July, end users and aluminum semis dealers will be more interested in purchasing, helping drive up operating rates at aluminum plate and sheet producers further during July.

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