Chinese aluminium processors’ operating rates drop 3.6 percentage points due to less operation for forthcoming CNY holiday

According to the Shanghai Metals Market survey, aluminium processors’ operating rates declined last week by 3.6 percentage points from a week ago, primarily attributing to less operation ahead of the Chinese New Year (CNY) holiday and tight logistics. Construction extrusion, wire and cable, and secondary aluminium industries saw a bigger decline as their producers started closing down activities for the forthcoming holiday and due to stringent raw material supply.

Aluminium plate, strip, foil and industrial extrusion producers, on the other hand, had relatively abundant orders and therefore maintained stable production. Going ahead, the overall decline in operating rates at aluminium processing enterprises will expectedly expand further as most of the small and medium-sized companies will close operations in early February.

Primary aluminium alloy: Operating rates of primary aluminium alloy producers were stable last week at 69.6 per cent, thanks to pre-holiday downstream stockpiling. But in February, productions are estimated to slow down by 10-50 per cent. A few of the smaller aluminium wheel factories already closed last week for the New Year holiday, while some will shut down this week.

Aluminium plate and strip: Major aluminium plate and strip enterprises recorded steady operating rates last week. In February, they will take a shorter CNY break this year as orders are scheduled until March. Operating rates at small and medium-sized enterprises declined due to high gas prices, environmental pressure, and approaching of the holiday.

Aluminium wire and cable: Operating rates at major aluminium wire and cable companies decreased by 2.6 percentage points last week. Current production is mostly scheduled for deliveries in March. Producers at Jiangsu and Zhejiang will close around February 6 for the holiday and resume production around February 19.

Aluminium extrusion and foil: Operating rates at major aluminium extrusion enterprises dropped sharply last week but remained flat at major aluminium foil enterprises, as domestic demand for automotive foils, battery foils, and air-conditioning foils remained strong.

Secondary aluminium alloy: Operating rates at major secondary aluminium producers dropped 0.7 percentage point to 57.4 per cent last week. Transport disruptions in North China due to the COVID-19 pandemic and shut down of aluminium scrap recyclers tightened raw materials supply, resulting in production drop at some recycling plants.