Aluminium billet processing fees rise in China Guangdong as extruders shift from ingot to billet

Driven by environmental factors Chinese aluminium extruders in Guangdong extrusion hub have turned away from aluminium ingot to billet, leading to a spike in billet processing fees. A large number of aluminium extrusion producers in Guangdong have closed their melting and casting facilities due to widespread environmental crackdowns. This has forced aluminium extruders to opt for aluminium billet over ingot. As a result, processing fees for aluminium billet have gone up.

As on Wednesday, September 27, aluminium billet processing fees were mainly between RMB270-400 per tonne.

On September 27, China’s Ministry of Environmental Protection convened routine press conference. Cui Shuhong, director of Division of Environment Impact Assessment, said in the past some illegal pollution emission firms reduce or even eliminate cost of environmental protection significantly, causing bad money drives out good. Thus they achieved higher profits than firms that strictly comply with environmental protection policies, which seriously damaged competitive order of the market and hinder optimization and upgrading of industrial structure.

In the upstream segment, aluminium prices in east China market rose notably on Wednesday on the back of pre-holiday stocking and higher SHFE aluminium.

Aluminium capacity swap quota traded prices have broken through RMB 10,000 per tonne. Yankuang Keao Aluminium sold 140,000 tonnes of aluminium capacity swap quota at RMB 140,200, which is equivalent to RMB 10,014 per tonne, SMM reported.