SMM Weekly Survey On Major Aluminum Processing Enterprises In China By Sector

SHANGHAI, Apr 25 (SMM) – The average operating rate across major aluminium processing enterprises was flat from a week ago at 65.3% last week, but slipped 0.8 percentage point year on year. The overall demand continued to slow down. It's worth noting that orders in alloy and extrusion sectors have shown a downward trend. Sharply rising aluminium prices somehow cooled down downstream purchasing enthusiasm. On the whole, the short-term operating rates will remain relatively stable, with eyes on the recovery process of end consumption, such as real estate and automobiles.

Primary aluminium alloy: The average operating rate of major primary aluminium alloy enterprises remained at 56.2% last week. The orders for primary aluminium alloy barely increased last week and are unlikely to improve significantly this week since most downstream enterprises will be shut down during the Labour Day holiday due to insufficient orders. It is expected that the operating rates of primary aluminium alloy enterprises will remain at a low level in the short term.

Aluminium plate/sheet and strip: The average operating rate of major aluminium plate/sheet and strip enterprises was unchanged at 79.4% last week. The demand recovery continued to slow down. Some small and medium-sized enterprises said that their new orders barely improved compared with the beginning of the month. It will take time for the domestic economy to fully recover, while production resumptions of overseas factories eroded the market share of Chinese exporters. In the short term, the operating rates of major aluminium plate/sheet and strip enterprises are expected to remain stable.

Aluminium wire and cable: The average operating rate of major aluminium wire and cable enterprises was unchanged at 58.4% last week amid stable end-user demand, and this situation looks set to continue in the near term. Aluminium wire and cable enterprises took a wait-and-see attitude amid sharply rising aluminium prices. Some enterprises may reduce production slightly after their raw material stocks decline, while others will restock on fears that aluminium prices will go up further.

Aluminium extrusion: The average operating rate of major aluminium extruders was flat at 66% last week. Some large aluminium extruders ran at 70-80% of their capacity, while the operating rates of small and medium-sized ones were generally 50-60%. New orders have declined. Large aluminium extruders in south China are switching some of their production lines into photovoltaic extrusion. The overall profit margins of construction aluminium extruders were relatively thin amid declines in conversion margins of both aluminium billets and construction aluminium extrusion. The operating rates are expected to be largely stable this week.

Aluminium foil: The average operating rate of large aluminium foil enterprises remained flat at 81.4% last week. The significant fluctuations of aluminium prices triggered wait-and-see sentiment among downstream buyers, but will have little impact on future demand. Considering that the growth of new orders have slowed down significantly, there may be limited room for operating rates to rise in the future.

Secondary aluminium alloy: The average operating rate of large secondary aluminium alloy enterprises was stable at 50.1% last week. Rising aluminium scrap prices drove up secondary aluminium alloy prices. Sluggish end consumption, such as automobiles, led to thin transactions in the secondary aluminium alloy market. Large secondary aluminium alloy plants maintained stable production on the back of sufficient orders, while small and medium-sized ones slashed their output due to falling orders, high costs and shrinking profits amid intensified market competition. In the short term, the overall operating rates are expected to be basically flat or fall.