A stable operating rate is seen across Chinese downstream aluminium sectors, achieved by lower processing fees

According to the Shanghai Metals Market survey the average operating rate of major aluminium processing enterprises decreased by 0.5 percentage point week-on-week to 64 per cent in the last week, from April 1 to April 5. The secondary aluminium alloy sector primarily contributed to the fall, while the other sectors remained stable.
 

Many downstream companies reduced their product processing fees to attract new orders and seize market share, but the actual demand was limited. In the short term, leading companies may maintain a high operating rate by exchanging price for volume, but profitability will most likely remain low.

The average operating rate of downstream sectors is also stable for now, notwithstanding the aluminium price surge through the week and a slight tremble in the enthusiastic purchase sentiment. Primary aluminium alloy companies recorded a stable operating rate at 50 per cent, while the operating rates of aluminium plate, sheet and strip companies rose 0.6 percentage points to 77 per cent.

Although the continued rise in aluminium prices last week suppressed buying sentiment, the increase in the alloying ratio of aluminium liquid and maintaining market share cushioned the operating rate. The rise in aluminium plate/sheet and strip processing rate could be attributed to reduced processing fees by some companies, which led to a rapid increase in new orders and production pace.