China’s aluminium billet operating rates inch up to 71.2% in May’22 owing to operation resumption after COVID pandemic

According to the Shanghai Metals Market, the average operating rates of aluminium billet producers using aluminium liquid grew by 0.2 percentage point month-on-month to 71.2 per cent in May 2022. In east China (mainly Shandong), north-west and south-west, aluminium billet operating rates exceeded 70 per cent, while dropped in north China by 1.12 percentage points to 54.1 per cent due to failure in securing aluminium liquid from local smelters in Inner Mongolia. However, the situation is likely to improve in June owing to operation resumption at a few billet producers who were closed for maintenance in April.

In central China, the average operating rates of aluminium billet producers recorded an increase of 6.86 percentage points month-on-month, bolstered by improved pandemic situation in Henan and recovery of aluminium liquid supply. As the shortages of aluminium liquid came to an end, the average operating rates in south-west China built up by 2.68 percentage points month-on-month.

On the whole, small billet producers were mainly hit by factors such as insufficient supply of aluminium liquid and difficulty in cost control. On the other hand, large enterprises could successfully maintain stable operating rates as they enjoyed certain advantages like cost control, bargaining power for aluminium liquid procurement, as well as constant sources of aluminium liquid supply.

In June, aluminium output and aluminium liquid production ratio are estimated to continue to rise slightly month-on-month, which will ensure stable raw material supply to billet producers. Downstream consumption is also expected to grow in June as the pandemic is gradually improving. For June, SMM predicts the average operating rates of aluminium billet producers using aluminium liquid to climb to 72 per cent.