Decline in operating rates of primary and secondary aluminium alloy enterprises last week pulled down the operating rates of major aluminium processors by 0.6 percentage point, found the Shanghai Metals Market. Some construction extrusion companies were affected by electricity curtailment, while car chip shortages and high raw material prices weighed on primary and secondary alloys operating rates. Nonetheless, short-term demand outlook for construction and photovoltaic industrial extrusion remains positive.
Aluminium wire and cable segment, on the other hand, witnessed higher operating rates, driven by delivery to the State Grid.
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Primary aluminium alloy: Operating rates at major primary aluminium alloy enterprises fell 0.4 percentage point from the previous week to 61 per cent. Power curtailment in Yunnan has forced local enterprises to reduce aluminium production. In a week ahead, operating rates are unlikely to improve significantly. Lower aluminium prices have not yet created an impact on the primary aluminium alloy market and the wait-and-see sentiment lingers.
Aluminium plate and strip: Major aluminium plate and strip enterprises maintained high operating rates. The peak season is approaching for construction use. In the coming week, operating rates are expected to remain stable.
Aluminium extrusion: Operating rates at major aluminium extrusion producers dropped slightly. In this month, production at large producers is expected to remain high on the back of strong demand from real estate and infrastructure sectors. Projects involving infrastructure and improvement of people’s livelihood will also generate some new orders. In terms of industrial extrusion, demand from automobile and home appliance sectors was strong in May.
Aluminium foil: Operating rates at major aluminium foil producers stood at 91.6 per cent. Downstream customers were less willing to pick up goods as falling aluminium prices turned them bearish. Food foil is expected to become a new bright spot. Large aluminium foil producers are expected to maintain high operating rates this week.
Secondary aluminium: Operating rates at secondary aluminium companies fell 0.5 percentage point. Production at some secondary aluminium plants reduced due to insufficient raw materials, even as aluminium scrap supply increased. In a week ahead, operating rates of secondary aluminium are likely to stabilise or fall slightly.
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