China’s domestic operating rates of molten aluminium casting billet plants decline in August to 67.84%

After remaining stable through the first half of 2022, operating rates of China’s molten aluminium casting billet enterprises declined in July and August, attributing to the decline in orders from downstream aluminium extruders, recurrence of the COVID-19, and power rationing in some areas. SMM survey found the average operating rates of domestic molten aluminium casting billet enterprises dropped by 3.51 percentage points M-o-M to 67.84 per cent in August 2022.

The decline was contributed by central, east, and south-west China, with average operating rates fell 6.47 percentage points in east China, owing to poor demand in Shandong, which made many local billet factories and traders shift cargoes to Jiangsu, Zheijiang, and other regions. In addition, the rising cost of aluminium billets production due to silicon and magnesium price surge forced many billet plants to cut output capacity.

In central China, the average operating rate of billet producers lost 11.19 percentage points, dragged down mainly by the plants in Henan as they cut output in line with the falling conversion margins and pandemic-induced lockdown. 

In south-west China, aluminium billets operating rates dropped by 7.34 percentage points as a result of power rationing in Sichuan that led many plants to cut or halt production. Although the power rationing policy ended in August, it took time for the plants to restart their electrolytic cells. The impact of power rationing is unlikely to subside until the end of September 2022. Besides, some billet plants in Inner Mongolia were affected by local safety inspections.

On the other hand, aluminium billet output in Guangxi and Yunnan rose steadily and likely to maintain the upward trend because of capacity transfer from other regions. But still, the overall market trend looks pessimistic for September and October, with operating rates likely to fall further.