Chinese aluminium producers operating rates recovered 0.2 percentage point last week; September looks more optimistic

In the week earlier, operating rates across major aluminium processors in China climbed 0.2 percentage point on a weekly basis to stand at 77.4 per cent. Orders from automobile, construction, electronics, and packaging sectors improved, while orders at extrusion, wire, and cable producers did not post much significant change. Producers of aluminium plate/sheet, strip, foil, primary, and secondary aluminium alloy are optimistic about demand in September, and therefore, expect to boost operating rates.

In the week ago, export orders of aluminium plate/sheet and strips improved slightly, while domestic demand remained as the main driver. Orders for construction plates and PS printing plates improved but can stock increased at a much slower rate in comparison with mid-August. Aluminium foil orders also saw an improvement, especially brazing foil, electronics foil, and container foil. Demand for light-gauge soft packaging foil remained strong but orders for air-conditioner foil fell sharply following the peak season. Steadily falling of aluminium prices prompted end-users to delay the pick-up goods, lifting finished product inventories at aluminium foil producers.

As far as operating rates at aluminium wire and cable producers are concerned, they are likely to decline in September. Operating rates at large aluminium extrusion producers are expected to remain stable in the short term. But last week, output at those large producers shrank as orders on hand decreased slightly and received fewer new orders than expected. Slow construction in the infrastructure and real estate sectors were the primary reason behind the fall in aluminium extrusion demand. Nonetheless, most of the producers see a stable output in September as compared to August.

At primary aluminium alloy producers, operating rates fell by 5.5 percentage points from a week ago to 59.2 per cent last week, as some producers adjusted product portfolio. For instance, a producer in North China reduced output of A356.2 aluminium alloy in favour of more lucrative A00 aluminium. This week, however, operating rates are expected to emerge stable, as a majority of primary aluminium alloy producers and aluminium wheel plants see an increase in consumption in September.

Operating rates at major secondary aluminium alloy producers increased, on the other hand, by 5.3 percentage points last week, driven by producers that rely on imported aluminium scrap. Producers are optimistic for the coming month as demand from auto component plants recovered and likely to grow significantly in the high season.

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