Aluminium extrusion producers operating rate in China drops in July on lowered demand from solar sector

Operating rate across 50 Chinese aluminium extrusion manufacturers reportedly fell in July as temperature continued soaring and labour shortage and orders fall from the solar sector remained a matter of concern. According to the recent update from Shanghai Metals Market, the manufacturers in July operated at 59.5 per cent, 2.98 percentage points lower from June.

The operation rate of construction extrusion fell 3.34 percentage points to stand at 60.4 per cent, while that of industrial extrusion hovered at 50.8 per cent.

Operating rate across large-scale manufacturers came in at 65.3 per cent, while that of the mid-sized and small-sized ones were at 55.5 per cent and 26.8 per cent, respectively.

The decline in operating rate across all the Chinese manufacturers irrespective of their business size could be primarily attributed to the temporary summer break at some plants due to high temperature. Dearth of skilled workers could also be another reason, reported an aluminium extrusion manufacturer with an annual capacity of 400,000 tonnes to SMM.

According to the report, some small-sized plants in Jiangyin city, Jiangsu province stopped operations from mid-July amid China’s effort to curb solar power capacity growth and the resulting subsidy cuts. For industrial extrusion, orders weakened from most downstream sectors, except for rail transport and new-energy vehicles.

SMM forecasts this year’s demand for aluminium extrusions in the solar sector to shrink 36 per cent from the last year to stand at 937,000 tonnes. The majority of the cuts would be in the second half of this year.

However, the increasing export orders from mid-June provided some support to the operating rate. As of July, the estimated export volume of aluminium strip, rod, and extrusion was at 78,000 tonnes.

In construction extrusion sector, downstream orders also climbed Y-o-Y, as real estate companies accelerated operations to improve cash flow. But despite all this, SMM expects further decline in operating rate to 56 per cent in August as domestic orders are likely to be weaken in the traditional low season.

Nevertheless, the country’s share of global extrusions usage is expected to increase to 69% by 2025. Last year, around 63 per cent was China’s estimated contribution to the world aluminium extrusions usage.