A stable operating rate is seen across Chinese downstream aluminium sectors, achieved by lower processing fees

According to the Shanghai Metals Market survey the average operating rate of major aluminium processing enterprises decreased by 0.5 percentage point week-on-week to 64 per cent in the last week, from April 1 to April 5. The secondary aluminium alloy sector primarily contributed to the fall, while the other sectors remained stable.

Many downstream companies reduced their product processing fees to attract new orders and seize market share, but the actual demand was limited. In the short term, leading companies may maintain a high operating rate by exchanging price for volume, but profitability will most likely remain low.

The average operating rate of downstream sectors is also stable for now, notwithstanding the aluminium price surge through the week and a slight tremble in the enthusiastic purchase sentiment. Primary aluminium alloy companies recorded a stable operating rate at 50 per cent, while the operating rates of aluminium plate, sheet and strip companies rose 0.6 percentage points to 77 per cent.

Although the continued rise in aluminium prices last week suppressed buying sentiment, the increase in the alloying ratio of aluminium liquid and maintaining market share cushioned the operating rate. The rise in aluminium plate/sheet and strip processing rate could be attributed to reduced processing fees by some companies, which led to a rapid increase in new orders and production pace. 

The average operating rate of leading aluminium wire and cable companies remained stable at 60.6 per cent last week. In the first week of April 2024, thanks to the rising orders from the State Grid sector, the leading aluminium wire and cable companies maintained a steady operating rate. According to State Grid's order performance, the monthly pick-up volume of aluminium wire and cables exceeded 150,000 tonnes. The shipments also increased, leading to stable and improved operating rate.

The operating rate of aluminium extrusion was recorded at 62.30 per cent, essentially unchanged from the previous week. In the building extrusion market, urban village renovation projects launched in some areas, contributing to slight recovery in orders for building profiles. In the industrial extrusion sector, the photovoltaic and automobile industries also added some shares to the extrusion orders and operating rates, keeping the overall operating rate of the aluminium extrusion industry stable.

The average operating rate of large aluminium foil enterprises also remained stable at 76.7 per cent last week, thanks to demand growth for packaging foil, battery foil, and air-conditioning foil. Only the secondary aluminium alloy operating rate recorded 3.7 per cent downfall to 57.3 per cent. 

Received under the content exchange agreement with SMM