China's aluminium processors operating rates continue to fall by 4.3 percentage points as severe floods in Henan dampen buying interest

Major aluminium processors in China faced a downfall in operating rates last week by 4.3 percentage points to 66.5 per cent. In Henan, operating rates slumped 24.6 percentage points to 41 per cent, the sharpest decline among all regions, as local enterprises were forced to reduce or suspend production due to the worst flood ever. In Guangdong and Shandong, operating rates dropped slightly.

Operating rates at large primary aluminium alloy enterprises remained stable, underpinned by rigid demand. But shortages of automotive chips, poor automobile consumption, and summer break at car makers have continued to constrain orders at primary aluminium alloy producers.

Operating rates at large aluminium plate/sheet and strip companies decreased to 57.2 per cent as many of the companies in our survey sample are located in Henan, where the flooding halted production and disrupted transportation.

Aluminium wire and cable companies recorded a fall of 2 percentage points in operating rates, while operating rates at large aluminium extrusion enterprises dropped slightly. Some companies cut output as summer heat affected sales.

Operating rates at large aluminium foil companies fell 4.3 percentage points to 82 per cent. The decline was bigger than in the previous week mainly because a large aluminium foil enterprise in Henan slowed down production due to the floods.

Large secondary aluminium alloy enterprises faced a drop of 0.8 percentage points to 55 per cent. Wait-and-see sentiment triggered by falling aluminium prices and poor orders in the off-season dampened the buying interest of die-casting plants, resulting in secondary aluminium alloy operating rates. Tight supply and high price of raw material also contributed to lower operating rates.