Operating rate at Chinese A356 aluminum alloy producers rises to 67.18% in Nov. 2014

Output at Chinese A356 aluminum alloy producers in SMM’s survey sample totaled 114,200 mt in October, up slightly from September. The average operating rate also inched up MoM to 67.18%.

Aluminum wheel rim exports have been stable since July, but domestic consumption fell, biting aluminum alloy demand. Although mainstream processing fees for A356 aluminum alloy (delivery to factory) remained stable at RMB 700/mt, some alloy makers were forced to cut processing fees below RMB 700/mt due to growing output and tepid demand.

Aluminum wheel rim manufacturers are unlikely to stockpile aluminum alloy in sizable amount before the end of the year, due to bearishness toward aluminum prices, tight cash, and modest consumption.

Competition in A356 aluminum alloy market will intensify further in 2015 due to new comers. Qinghai Materials Industry Group Corporation, Qinghai Yellow River Hydropower Recycled Aluminum Xinye Branch, and other aluminum smelters will begin aluminum alloy production late this year or early next year. Besides, alloy makers near aluminum smelters in Xinjiang will also set foot into A356 aluminum alloy segment.

Xinjiang East Hope Nonferrous Metals Co. plans to build a 100,000 mt/yr silicon plant in Xinjiang to provide ample and cheap raw materials for alloy makers in Xinjiang and its neighboring regions. Hence, competition in semi-finished products (such as aluminum rod and alloy ingot) markets will also becoming increasingly fierce next year.