Composite PMIs for China’s some aluminium downstream sectors grow over month, thanks to demand recovery

According to the monthly PMI report presented by the Shanghai Metals Market, the composite PMI reading for China’s aluminium downstream processing sectors came in at 49.1 in March, recording a month-on-month rise of 19.8 percentage points and a year-on-year decline of 14.1 percentage points.

Aluminium processing industry, as a whole, stumbled in March for many reasons, including the outbreak of a new COVID wave across Shandong province, north-east China, and other places affecting production and transportation that resulted in less-than-expected operating rates and new orders. Also, the wait-and-watch sentiment of downstream consumers due to soaring domestic aluminium prices contributed to the downtrend in operating rates. 

In March 2022, indexes for aluminium plate/sheet and construction aluminium extrusion were in the contraction zone. While the former was affected by a resurging pandemic and high finished product inventory, the latter was jolted by falling terminal orders and subdued production.

The PMI of aluminium plate/sheet in March was 20.4 percentage points more than in the previous month to stand at 47.8, as the said month is a usual peak season for consumption. But despite the rise, the PMI hovered below the 50 point mark, possibly due to production cut at some enterprises during the Spring Festival holiday in February, in addition to fresh domestic pandemic that led to the slow demand and operations. In April, the PMI of aluminium plate/sheet is likely to continue to run below the 50 point mark. 

The PMIs of aluminium foil and construction extrusion rose by 22.2 percentage points and 20.3 percentage points, respectively. But the latter still remained in the contraction range of 44.7, while the former stood at 54.6 driven by the increased orders for products like air-conditioning foil and food packaging foil. In March, the operating rates of domestic aluminium construction extruders improved compared with February resulting in higher output, but certain areas were disturbed by the pandemic which ceased production at many plants.   

The PMI index of industrial extrusion increased by 23.2 percentage points from February to 54.9, as the demand recovered and orders performed well. New orders flowed in, especially in the photovoltaic sector. For aluminium wire and cable sector, PMI grew 11.9 per cent M-o-M to 51.3 but stood down by 13.7 per cent year-on-year.

SMM survey also showed the composite PMI of primary aluminium alloy sector was 54.3, seeing an increase of 18.9 percentage points M-o-M. That was buoyed by the acceleration of production at many alloy factories. But many upstream and downstream companies reported that there was a downswing in the consumption of auto sector than was expected. Second aluminium alloy’s PMI was 51.8 rallying by 19.3 percentage points, as the secondary aluminium plants resumed normal after the Spring Festival holiday.