China’s secondary aluminium operating rates fall 5.44 percentage points to 59.56% in May 2021

According to the Shanghai Metals Market, secondary aluminium producers operating rates decreased 5.44 percentage points month-on-month to stand at 59.56 per cent, as a result of weak operating rates at small and big secondary aluminium plants. On a year-on-year calculation, operating rates edged up 10.87 percentage points.

The average price of aluminium alloys ADC12 stood above RMB 19,000 per tonne. Losses at die-casting companies purchasing spot cargoes expanded to around RMB 2,000 per tonne in early May. Many companies cut output against losses, which also contributed to the fall in secondary aluminium producers operating rates.

In addition, lack of chips used in automobiles and weak demand for automobiles also dampened the operating rates. Orders slid sharply and output declined.

On the supply side, available aluminium scrap in the market remained in deficit and some secondary aluminium plants reduced production amid raw material issues. In Guangdong, orders fell slightly due to the power curtailment policies and the spread of the pandemic.

Prices of ADC12 dropped to around RMB 18,500 per tonne in June. Many traders were bearish and sold at lower prices. Trades were lacklustre as demand weakened further. With the onset of the traditional off-season, operating rates in secondary aluminium industry should continue to decline in June.