SHANGHAI, May 16 (SMM) - The average operating rate across major aluminium processors increased 1.3 percentage points from a week ago to 58.6% last week, but down 6 percentage points from before the Labour Day holiday. The operating rates in aluminium extrusion and secondary aluminium alloy sectors improved as most companies have returned to production after the Labour Day holiday. Aluminium plate/sheet, strip, foil and primary aluminium alloy sectors maintained stable operating rates. With transportation in mainstream consumption areas gradually recovering from the pandemic, the production in aluminium alloy, wire & cable and extrusion sectors is poised to pick up. The pandemic has severely hit the domestic automobile manufacturing industry, causing the demand for automotive alloy and industrial extrusion to fall short of expectations. However, many auto makers in Jiangsu, Zhejiang and Shanghai will gradually resume production in the future, which may drive the recovery of automobile-related aluminium processing enterprises. Most of the aluminium extruders and secondary aluminium alloy plants in Guangdong saw their production recover to pre-holiday levels. With the effective control of the domestic pandemic, downstream consumption will gradually recover. Aluminium prices have fallen below 20,000 yuan/mt recently, which will also encourage downstream enterprises to produce.  

Primary aluminium alloy: The average operating rate of large primary aluminium alloy enterprises remained at 60% last week. Although the traffic in east China has gradually recovered after the pandemic situation improved, alloy plants maintained stable production amid volatile aluminium prices and backlog of finished products. If the pandemic continues to improve in the future, the recovery of downstream demand may drive up the operating rates of large primary aluminium alloy enterprises. However, weak demand in the automotive industry and approaching off-season may constrain the upside room of operating rates.  

Aluminium plate/sheet and strip: The average operating rate of large aluminium plate/sheet and strip enterprises was flat at 81% last week. Aluminium prices fluctuated wildly. The pandemic in east China persisted. Overseas orders were sluggish. Despite insufficient new orders, large backlog orders allowed large producers to maintain stable production.  In terms of products, the orders for general plates were severely impacted, while the orders for new energy vehicle-related plates were relatively stable. If the pandemic situation in east China improves further, consumption will recover and the operating rates of large enterprises will increase.

Aluminium wire and cable: The average operating rate of large aluminium wire and cable companies increased by 1.4 percentage points to about 55.4% last week. The upcoming delivery of orders and sharp retreat in aluminium prices encouraged producers to step up production. The pandemic situation in Jiangsu and other regions has improved. With the recovery of traffic, companies are more likely to increase their production. In addition, sufficient orders for deliveries in May-June will also boost the operating rates of large producers.

Aluminium extrusion: The average operating rate of large aluminium extruders rose 6 percentage points to 62.5% last week. Production returned to normal after the Labour Day holiday. Downstream demand and logistics were still affected by the pandemic, which had a great impact on the production of enterprises. With improvement of the pandemic situation in some areas, some companies have gradually resumed their production. Some companies believe that their production and orders will improve in May. The operating rates of large aluminium extruders are expected to rise slightly this week.

Aluminium foil: The average operating rate of large aluminium foil enterprises remained flat at 79.3% last week. Volatile aluminium prices turned end users more cautious about placing orders. At present, the pandemic situation in east China is improving as a whole, and transportation has recovered as well. In light of robust demand for packaging foil and other products, many large aluminium foil companies are optimistic that their operating rates will rise in the short term.  

Secondary aluminium alloy: The average operating rate of large secondary aluminium alloy enterprises rose 5.6 percentage points to 48.8% last week. Production gradually recovered from the pandemic and the Labour Day holiday. Shipments of raw materials and finished products have become smoother with the improvement of the pandemic. Orders picked up after a growing number of auto makers resumed their production. However, the recovery of downstream demand was relatively slow, keeping the operating rates at a low level. The operating rates are expected to climb further as end users accelerate their resumption of production.

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