China’s aluminium wire rod producers’ operating rate grows on improved State Grid orders

According to the Shanghai Metals Market, domestic aluminium wire rod producers’ operating rate increased last week to meet backlogged orders. There were adequate inflows of State Grid orders through tenders in Qinghai, Jiangxi, Jiangsu, and Sichuan, leaving producers with ample orders on hand. The bid announcements in Jiangsu and Sichuan also included heat-resistant alloy stranded wire orders worth of total RMB 68.28 million.

Thus, to meet these orders, China’s domestic aluminium wire rod producers ramped up their operations, leading their operating rate to 67.2 per cent.

Last week, Chinese domestic aluminium wire rod prices remained steady, contributing to transactions improvement driven by destocking inventory accumulation at low prices to obtain cash flow.

On Friday, June 28, the average ex-factory processing fee for 1A60 ordinary aluminium rods in Shandong was RMB 300 per tonne, while the processing fee for 1A60 aluminium rods in Henan was RMB 350 per tonne. In Inner Mongolia, Hebei, and Jiangsu, the ex-factory processing fee for ordinary aluminium rods was RMB 300 per tonne, RMB 350 per tonne, and RMB 450 per tonne, respectively. In south China, the processing fee was recorded the highest at RMB 500 per tonne.

On supply side, the rise in market activity prompted aluminum wire rod inventory destocking and production increase. However, the recent sharp decline in aluminum prices may dampen enthusiasm among wire rod producers to continue ramping up their operations. But with the retreat in aluminium prices, downstream aluminium wire and cable companies may see a rebound in orders.

sourced from SMM under the content exchange agreement