China’s secondary aluminium operating rates record growth in March

According to Shanghai Metals Market, operating rates across secondary aluminium producers in China have recorded a growth of 22.02 percentage points month-on-month and 0.3 percentage point year-on-year to average at 61.12 per cent in March.

This hike in secondary aluminium operating rates is attributable to weak export prices that drove aluminium scrap producers to focus on the domestic market rather than sending the scrap overseas.

Increasing demand is also a reason for the growth in secondary aluminium operating rates, particularly for the sharp month-on-month rise. Downstream buyers had brought forward their April orders to chase VAT invoices with a rate of 16 per cent before the tax cuts took effect and that resulted in demand increase.

However, in April, the operating rates across Chinese secondary aluminium producers are likely to fall to 55 per cent, according to SMM forecast. The reasons could be the production suspension at most die-casting plants in Kunshan, Jiangxu since the beginning of March after a severe safety accident and front-loaded orders in late March that has depleted demand in April.