Operating Rates across Aluminium Processing Sectors Recovered and Still Have Upside Room in the Near Term

SHANGHAI, Feb 17 (SMM)－The average operating rate across major aluminium processing enterprises rose 1.7 percentage points on a weekly basis to 61.5% this week. Aluminium plate/sheet, strip, foil and construction extrusion sectors performed the best with the gradual arrival of the peak season, encouraging producers to ramp up their production. The operating rates are on track to maintain an upward trend in the short term. Sluggish auto market constrained the operating rates in primary and secondary aluminium alloy, as well as industrial aluminium extrusion sectors. Improving orders from a few customers drove operating rates in aluminium wire and cable sector to pick up, but the increase is unlikely to sustain in view of the slow recovery of end-use projects. On the whole, operating rates in aluminium processing sectors will climb further in the short term with gradual arrival of the peak season.

Aluminium wire and cable: The average operating rate of major aluminium wire and cable companies rose 3 percentage points to 50%. The production growth was mainly driven by backlog orders as most companies received very few new orders. Mounting finished product inventories deterred producers from increasing their production significantly.  Only a small number of enterprises reported an increase in their new orders. In the short term, the operating rates will stabilise due to lagging recovery of end-use projects. 

Aluminium extrusion: The average operating rate of large aluminium extruders rose 0.5 percentage point to 58%. With the resumption of stalled real estate projects, construction aluminium extruders saw their orders improve greatly compared with the same period in previous years, encouraging them to step up their production. Dismal auto market had a knock-on effect on industrial extrusion segment, while photovoltaic frame enterprises maintained high operating rates and some were even operating at full capacity. It is expected that the operating rates will continue to rise slightly next week.

Aluminium foil: The average operating rate of large aluminium foil companies added 1 percentage point to 80.4%. As consumption has picked up gradually, some enterprises geared up their production, with some production lines running at full capacity. Now that the impact from pandemic and CNY holiday has basically faded and the traditional peak season is about to come, it is widely believed that the short-term operating rates will extend the increase. 

Secondary aluminium alloy: The average operating rate of large secondary aluminium alloy enterprises increased 3.1 percentage points to 47.5%, but still below pre-CNY levels. Orders from new energy sector were relatively strong, while demand from other sectors failed to recover noticeably, which constrained the operating rates of secondary aluminium alloy plants.  In addition, raw material shortages also plagued secondary aluminium alloy plants.  At present, most companies are placing their hopes on the unleash of end demand in March. The short-term operating rates are likely to continue to rise slightly or stabilise.