China’s aluminium processors report further decline in operating rates last week: Secondary alloy operating rates fall to 56%

Operating rates across major aluminium processors in China decreased slightly by 0.3 percentage point last week to stand at 73.1 per cent. Decline in orders, particularly in the real estate, transportation, and durable good sectors, with the arrival of traditional off-season contributed to this fall, found SMM.

Operating rates at major primary aluminium alloy enterprises dropped to 59.2 per cent as poor car sales, chip shortage and high temperature continued to suppress demand for the metal. However, the China Passenger Car Association (CPCA) has predicted that the impact of chip shortage will reduce in the near future and that the chip shortage will get resolved by September with the release of more production capacity.

Operating rates of major aluminium plate and strip enterprises saw a decline of 2 percentage points to 86.8 per cent, attributing to a plunge in new orders reported by a growing number of producers. Aluminium wire and cable operating rates decreased relatively slower by 0.4 percentage point. Producers in Shandong and Henan reduced production due to environmental protection and transportation restrictions before the 100^th anniversary of the CPC founding.

Aluminium foil producers reported a fall of operating rates to 87.9 per cent. They see no increase in production and sales till August 2021. Operating rates at large aluminium extrusion companies changed marginally. Most of the large producers have about one month of orders on hand, while small and mid-sized companies have faced decline in orders.

Secondary aluminium alloy enterprises witnessed a decline in operating rates to 56.3 per cent as new orders continued to decline due to the traditional off-season. Besides, tight supply and high prices of aluminium scraps forced some secondary aluminium companies to cut production.