SMM Weekly Analysis Of Chinese Aluminium Market Fundamentals

SHANGHAI, May 4 (SMM) –The domestic operating aluminium capacity added 400,000 mt MoM to around 40.65 million mt in April, SMM data showed. The growth was mainly contributed by Guizhou, Guangxi, and Sichuan, where there are still 700,000 mt of idled capacity waiting to be put into operation in the future. Last week, aluminium extrusion was the only downstream sector that saw an increase in operating rates, which was largely driven by the rush to deliver orders before the upcoming Labour Day holiday. Operating rates in the secondary aluminium alloy sector declined due to poor demand. The rest of downstream sectors saw stable production. Wire and cable producers will be able to maintain high operating rates thanks to the peak season of power grid construction. Affected by poor orders and wait-and-see sentiment among end-users triggered by continuously falling aluminium prices, operating rates in aluminium plate/sheet, strip and foil sectors barely rose. Most downstream enterprises hardly stocked up before the Labour Day holiday, and their operating rates will probably drop after the holiday due to poor new orders. The domestic aluminium ingot social inventory dropped significantly last week, but may accumulate slightly after the holiday.