Increasing consumption of aluminium extrusions to continue bolstering aluminium billets processing fees

According to Shanghai Metals Market, the processing fees for aluminium billets are likely to remain strong in the medium terms, as the orders for aluminium extrusions have improved in a peak during March-May season.

In March, the operating rates across major Chinese aluminium extrusion producers averaged at 60.4 per cent and are likely to grow further to 62 per cent in April and change a little in May, found an SMM survey.

This rising trend of aluminium extrusions operating rates has led to a steady supply of aluminium billets. Besides, the beginning of new capacity bolstered the supplies further, despite lower output from Xinjiang and Shandong.

East Hope increased the price of molten aluminium at the end of last year and that frustrated aluminium billet manufacturers in Xinjiang with over 800,000 tonnes per year of capacity. According to the latest SMM survery, about eight aluminium billet producers in Changjizhou of Xinjiang are yet to recommence operations. However, fewer supplies from Xinjiang bolstered aluminium billet processing fees hike in Guangdong. 

Aluminium billet producers in Shandong also faced some trouble due to the molten aluminium supply issue, found SMM.

SMM survey data shows that around 1.5 million tonnes per year of capacity across China has reduced since 2018, while some 1.49 million tonnes per year of new capacity started operation.

The stable supplies of aluminium billets and improved consumptions, on the other hand, have led to a decline in inventories since March. Stocks across five major consumption areas including Guangdong, Wuxim Changzhou, Huzhou, and Nanchang stood at 98,600 tonnes as of April 18, in line with levels in March 2018.

This lowered inventories trend is estimated to continue for now as consumption is likely to improve, resulting in offering support to processing fees.