China’s secondary aluminium operating rates fell nearly 1% in June on lower domestic downstream demand

According to the Shanghai Metals Market data, China's average secondary aluminium operating rates in June fell 0.7 percentage point to 48 per cent month-on-month. In May, the operating rates were 48.69 per cent after growing by 1.6 percentage points from the previous month.

Year-on-year, China’s June secondary aluminium operating rates registered a decline of 4.3 percentage points, lower than the yearly drop of 5 percentage points in May.

Shanghai Metals Market suggests higher arrivals of aluminium alloy ingots from overseas to China in June attributed to the month-on-month downtick in the country's secondary aluminium operating rates. However, SMM expects the operating rates in July to remain stable.

There was no significant change in secondary aluminium demand in China or overseas. Weak downstream demand and higher inflow of imported aluminium alloy ingots emerged as the major factors affecting operations at secondary aluminium producers.

In July, the decline in domestic downstream demand following the onset of a slack season is expected to be limited compared to May and June. Hence, the operating rates across secondary aluminium producers are expected to display a positive sentiment. Also, overseas demand recovery in line with the revival in Japan’s imports from China is likely to boost operations at secondary aluminium producers.