Downstream Stocking Was Insufficient Before Labour Day Holiday

SHANGHAI, May 4 (SMM) – This year's Labour Day holiday is the first long holiday in the traditional peak season since China lifted its Covid restrictions. The production schedules of aluminium processing enterprises before and after the holiday reflect their expectations for aluminium consumption. The followings are SMM survey of aluminium processing enterprises by sector:

Aluminium extrusion: Large enterprises generally took 2-4 days of break for the holiday, while small and medium-sized ones will be shut down for about three days. Some companies rushed to deliver orders before the holiday. However, it is expected that the operating rates will drop slightly after the holiday if orders still show no improvement.

Aluminium plate/sheet, strip and foil: Most companies said that end-users were closed for the holiday and their stocking volume fell precipitously compared with previous years. With aluminium prices and conversion margins of aluminium plate/sheet and strip both in a downward channel, end-users delayed or even cancelled their orders. To cope with this situation, most companies ran just 40-70% of their capacity during the holiday. It is expected that the operating rates will decline after the holiday.

Aluminium wire and cable: Most companies stocked up before the holiday and remained in normal operations during the holiday to deliver backlog orders. Now is the peak season for power grid construction, which will sustain stable production in the aluminium wire and cable industry. 

Casting aluminium alloy: Downstream die-casting plants and wheel factories were mostly shut down for 1-3 days for the holiday and they barely stocked up ahead of the holiday amid sluggish auto market. Poor demand and production suspensions of downstream enterprises drove some secondary aluminium alloy plants to cut their production last week. The operating rates may continue to fall this week due to the holiday break.