China's major aluminium processors of extrusion to secondary alloy witness growth in operating rates, thanks to demand recovery in real estate

Operating rates at major aluminium processors in China increased 1.7 percentage points last week ended on May 14, with aluminium extrusion segment witnessing the biggest rise driven by demand recovery in the construction sector. Operating rates in the aluminium wire and cable industry rebounded slightly due to the concentrated delivery orders. Meanwhile, primary aluminium alloy sector saw a decline in operating rates as more carmakers curtailed output due to chip shortages.

Operating rates at major primary aluminium alloy enterprises inched down by 0.9 percentage point from the previous week to 61.9 per cent. Output and sales fell month-on-month in April due to high aluminium prices and car chip shortages. Although wide spread between aluminium and silicon price improved profit of primary aluminium alloy companies, processing fees reduced and may continue to fall. Primary aluminium alloy operating rates are expected to continue to decline this week.

Operating rates at major aluminium plate and strip enterprises maintained high operating rates, thanks to more than one month of backlog orders. Orders for can stock rose to the peak but new orders from the automobile and 3C sectors fell due to chip shortages. However, major aluminium plate and strip enterprises are expected to continue to witness a stable operating rate due to saturated orders.

Operating rates of aluminium wire and cable companies also rebounded slightly, driven by increasing replacement of copper with aluminium. The replacement is expected to boost aluminium demand further in the wire and cable sector, according to SMM. Aluminium rod plants reported stable operating rates and high processing fees.

Operating rates at major aluminium extrusion companies also continued to rise as revival of the real estate industry boosted demand for construction aluminium extrusion, especially aluminium formwork, which is in short supply. Operating rates of aluminium foil, however, remained flat last week.

Operating rates of secondary aluminium alloy enterprises dropped 0.3 percentage point from a week ago to 60.5 per cent. Secondary aluminium prices fluctuated at a high of RMB 19,500 per tonne, while primary aluminium prices rose to peak. Many die-casting enterprises suffered losses due to high raw material costs and were forced to reduce or suspend production. SMM expects secondary aluminium alloy operating rates to continue to fall slightly this week.