China’s aluminium wire and cable sector’s operating rate drops to 41.12% in July 2021; Likely to recover in August to 45%

Shanghai Metals Market found that aluminium wire and cable sector’s operating rate stood at 41.12 per cent in July 2021, reflecting a drop of 0.2 percentage point from June. But on a year-on-year calculation, it edged 0.4 percentage point higher.

The month-on-month decrease in operating rate in July could be attributed to the high aluminium price and temperature. The SMM average monthly spot aluminium price in east China stood at RMB 19,023 per tonne, up by RMB 414 per tonne from June.

Also, power consumption restrictions imposed by the State Grid on aluminium producers led to a decline in operating rate. Large companies reported higher production and growing news orders by leveraging on their financial strength, but smaller companies performed poorly due to losses arising from rising raw material prices.

On the other hand, severe floods in Henan province disrupted production in Zhengzhou and Jiaozuo. Operating rate in south China declined due to fewer projects from China Southern Power Grid, high temperature and power curtailment.

The continued aluminium price rally and power consumption restrictions are estimated to prevent operating rate from rising significantly in August. However, delivery of backlog orders after high temperature is gone may allow operating rate to recover to 45 per cent.