Operating rates across Chinese aluminium extrusion manufacturers lower in January 2019

Shanghai Metals Market research found that operating rates across some 50 Chinese extrusion manufacturers in January dropped on an incessant weak demand from the construction extrusion sector.

Surveyed extrusion manufacturers in the said month operated at 49.02 per cent, month-on-month down by 5.67 percentage points, but up 1.12 percentage points year-on-year.

The operating rate for construction extrusion, on the other hand, registered 47.23 per cent, down from a high of 63.69 per cent in June 2018. The operating rate for industrial extrusion also edged down, but in a limited range because of the stable demand from aluminium formwork and solar industry. From 59.77 per cent in December, the rate dropped to 58.75 per cent in January.

Operating rates across large manufacturers with an annualised capacity above 100,000 tonnes slid 4.42 percentage points MoM in January. The rates across medium-sized manufacturers with a capacity of 30,000 tonnes to 100,000 tonnes fell sharply by over 10 percentage points on a monthly basis. But small manufacturers with a capacity below 30,000 tonnes exceptionally registered increased operating rates.

An update in the sample accounted for the increase in operating rates for small mills, while fewer downstream orders resulted in significantly lower rates across medium-sized manufacturers. 

Some producers of aluminium extrusion had gone on breaks from mid-January ahead of the Chinese New Year holiday, and that also weighed on overall operating rate in the industry.

SMM research showed that this bearish sentiment on downstream orders would continue in February and likely extend decline in the operating rates. However, some manufacturers believed that consumption will pick up in March-May given national support on infrastructure and the solar industry.