COVID-19 Impact: China’s secondary aluminium operating rates shrink in April on slow resumption of demand

According to Shanghai Metals Market data, operating rates across China’s secondary aluminium industry in April stood at 47.08 per cent, down 0.22 percentage point from a month ago. In March, China’s secondary aluminium producers’ operating rates were 47.32 per cent after rebounding by 29.2 percentage points from a month earlier.

Year-on-year, China’s April secondary aluminium operating rates stood down by 11.22 percentage points, whereas in March, the operating rates were down by 16.37 percentage points over the year.

The persisting impact of COVID-19 kept domestic and overseas demand subdued, resulting in the downfall in operations at secondary aluminium smelters. Producers saw a limited increase in new orders after they fulfilled previous ones. This, together with an increase in aluminium alloy imports to China, depressed the domestic secondary aluminium production.

Secondary aluminium producers are cynical about their operations in May as well, as the crippling impact of the pandemic has slowed the resumption of demand, both domestic and overseas. Hence, the operating rates are anticipated to shrink further in May. But the year-on-year decline is likely to narrow from April as the operating rates in May 2019 also fell significantly due to decreased demand amid the destocking of cars with lower emission standards.

SMM says the impact of aluminium alloy ingot imports on China’s secondary aluminium operating rates will be closely monitored in May and June as the overseas demand may rise with the slow recovery of the foreign car market. SMM expects a good amount of aluminium alloy ingot to arrive in China between end-May and June.