A356 alloy output and operating rates in China dropped in August

A356 alloy output and operating rates at producers surveyed by Shanghai Metals Market (SMM) dropped in August due to production cuts and suspension.

A356 alloy output at the companies surveyed slipped by 4,000 tonnes from July to 102,000 tonnes in August. The average operating rate also edged down 2.12% month-on-month to 52.85%.

On the supply side, alloy supply fell due to production cuts and suspension. For example, one aluminum smelter in Shandong cut production, and an alloy maker, also in Shandong, scaled back production due to inferior quality of aluminum liquid – raw material for making alloy. One Henan-based aluminum producer halted alloy production for a week due to problems in production. Tighter supply lent some support to alloy prices. Though processing fees of aluminum alloy remained between 600-650 yuan per tonne in August, mainstream traded prices did edge up.

As regards demand, aluminum wheel manufacturers, consumers of alloy, stepped up production with the passing of heat wave, but they were still plagued by liquidity crunch. As such, aluminum alloy producers and traders prefer to supply wheel manufacturers with good records of timely payment when profits are guaranteed.

SMM expects processing fees of aluminum alloy to remain between 600-650 yuan per tonne in September. This is because growing operating rates at aluminum wheel manufacturers will boost consumption of aluminum alloy, but any growth in demand will be tempered by tight liquidity.