Facing Tight Supplies, China’s Secondary Aluminium Producers Boosted Operating Rates In November

Facing Tight Supplies, China’s Secondary Aluminium Producers Boosted Operating Rates In November

Despite difficulties with obtaining raw materials in some sectors, total aluminium production in the People’s Republic of China spiked last month, largely in response to increased demand from automakers.

Per a survey of producers conducted by Shanghai Metals Market (SMM), operating rates for secondary aluminium producers rose to 62.57 percent last month, which was an increase of 0.05 percent over the prior month and better by 1.05 percent on the year.

According to SMM, the increase was led by China’s larger secondary aluminium producers, which saw spikes in demand from automakers push their operating rates to the year’s highest levels.

However, the overall rise was blunted by smaller and mid-sized secondary aluminium producers, many of whom were forced to scale back on account of difficulties in sourcing the raw materials needed to continue large-scale production. Such producers were especially hard hit in Zhejiang and Guangdong, as those in coastal cities are heavily dependent upon overseas aluminium scrap. Thanks to aluminium scrap import quotas instituted by Beijing this summer, many such plants were forced to cut production in half, leading to an overall operation rate of under 30 percent last month.

Going forward, experts predict a drop in operating rates over the course of December. Though most typically re-stock in anticipation of the Spring Festival and the associated Golden Week in late January, producers are likely to take only a limited amount of orders for the month due to higher prices for aluminium scrap than finished aluminium products.