Multiple Chinese aluminium smelters in Guangdong are shutting down prior to the Spring Festival holiday this year, whereas other players are recalibrating their output goals for the prevailing times. All this is due to a plunge in the domestic demand for aluminium in the recent weeks.
Even though Beijing has discarded the rigid COVID-19 protocols, which were the main reason for downgrading manufacturing rates in the country, increasing infection percentage and a downturn in the construction sector have levied heavily on aluminium demands. Also, international trade has dwindled, creating a dent in the market.
A zinc-alloy producer from Guangdong has notified sources about the falling production rate of metals in the Chinese province.
“Our orders are cut by 30% as our customers, namely metals processors, are shutting down their production because of subdued consumption from real estate,” the unidentified person stated.
He also mentioned that his firm had already stopped all operations for the Spring Festival, which is scheduled to begin in the next three weeks. The official also made it clear that the employees would not only spend the usual “golden week” on leave. Rather they would return during the first week of February after an extended holiday.
Also, a copper producer in Foshan informed sources that many operations throughout the supply chain have not been up to their standard speed.
“This year, at least half of our suppliers and customers have shut down their production for about one month,” the copper producer identified.
LI Suheng, the CITIC Futures non-ferrous metal analyst, has claimed that a substantial number of aluminium producers in Foshan have shut down their doors for the Spring Festival beforehand.
“This will have a significant impact on aluminium demand in the short term,” he pointed out.
Industry experts are explicitly saying that aluminium stocks will experience a hike to 1.24 million tonnes in the next month, double the estimated 500 thousand tonnes of aluminium stored in warehouses presently.
Even though the Chinese Government has introduced plenty of new policies in an urge to rejuvenate the property sector, it has been predicted by metal producers that these policies won’t be beneficial for them in the long run.
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