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Start-up rate rebounds, new orders are worrying-- tracking of aluminum processing industry

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Start-up rate rebounds, new orders are worrying-- tracking of aluminum processing industry
Start-up rate rebounds, new orders are worrying-- tracking of aluminum processing industry

Abstract: in the next two months, the production and operation of the domestic aluminum processing industry will face greater challenges, and the demand will be repeated.

Since March, the domestic epidemic situation has been gradually brought under effective control, and the resumption of work and production in various industries has been promoted smoothly. Yuefeng Aluminum Technology has conducted a continuous investigation on the operating rate and order situation of the aluminum processing industry, and learned that the start-up situation of the aluminum processing industry has obviously improved. As the backlog of orders has entered the state of production scheduling, the start-up rate has rebounded steadily. Some enterprises even reached full production and overproduction in a short period of time. However, the situation of new orders is worrying, with companies generally saying that the recovery in domestic demand is not obvious, while the blow to export orders caused by a full-blown outbreak abroad has been apparent since late March.

The operating rate has gradually picked up, but the loss of production is difficult to recover.

At the end of January and February, when the epidemic was most serious, most domestic aluminum processing enterprises basically stopped production. In late February, as the situation of epidemic prevention and control continued to improve, the aluminum processing industry gradually resumed production, and the backlog of orders had been pressed to schedule production. The overall operating rate of the industry rebounded rapidly, reaching about 70% by the end of March, basically returning to the annual average. However, the improvement in production conditions in March cannot make up for the production losses in the previous two months. Yuefeng Aluminum estimates that due to the impact of the epidemic, aluminum production in the first two months was only 3.5 million tons, down 27.6 percent from the same period last year. Driven by the rapid increase in aluminum production in March, China's aluminum processing materials production totaled 6.9 million tons in the first quarter, still down 13% from the same period last year.

The epidemic situation affects the differentiation, and the start-up status of different kinds of aluminum products is different.

There is a significant difference in the start-up status of industrial and building materials in the aluminum extrusion industry. The epidemic has a great impact on the production of traditional building profiles. As most of the downstream real estate enterprises are still in a state of shutdown, the operating rate of building profiles is still obviously on the low side. Take Nanhai, Guangdong as an example, at the end of March, the operating rate of large local construction profile enterprises was still less than 50%; the demand field of industrial profiles was relatively scattered, and the demand performance was slightly better. The operating rate of enterprises reached more than 65% at the end of March, which was significantly higher than that of building profiles.

Compared with the aluminum extrusion industry, the consumption field of plate and strip is more scattered, the demand will not be dominated by the performance of a consumption field, and the operating rate has recovered obviously. Plate and strip enterprises in Zhejiang and Shandong said that although there was a loss of large customers in areas such as automobiles, there was an increase in the number of small customers from areas such as 5G communications and 3C electronics. According to the investigation and judgment of Yuefeng aluminum, the average operating rate of the domestic aluminum plate and strip industry was about 75% at the end of March.

Aluminum foil products are mainly used in packaging and durable consumption and other fields, especially in the packaging field with obvious "non-cyclical" characteristics, coupled with the increasing demand for drugs and food caused by the epidemic, which has increased the market demand for aluminum foil for packaging. Therefore, at present, the domestic mainstream aluminum foil production enterprises are in good working condition, and the production operation is stable. At the end of March, the average operating rate of the whole industry reached more than 80%.

Supply chain reshaping, differentiation between regions and enterprises.

The reshaping of the supply chain between regions and between enterprises is a significant change brought about by the epidemic. On the one hand, due to the different epidemic situation and the degree of control in different regions, there are significant differences in the operating rate of enterprises. Chongqing, which is less affected by the epidemic, and enterprises in economically developed coastal areas such as Fujian, Jiangsu, and Zhejiang, which are close to ports, have a strong desire to resume work, and the speed of resuming work is relatively fast, attracting the accumulation of orders. at present, the operating rate of enterprises in most of the above-mentioned areas is more than 85%, and some enterprises are even full production and overproduction, while the average operating rate in Hebei, Henan, Jiangxi and other places is generally less than 60%. On the other hand, the operating rate and orders of large enterprises with strong overall strength and ability to resist risks are even better than that of the same period last year, taking orders that small and medium-sized enterprises are temporarily unable to carry out.

The shortage of new orders is particularly worrying in the export market.

Although production gradually picked up after the start of construction, the fundamental reason for the rapid increase in the operating rate of the processing industry in March was driven by the previous backlog of orders. As domestic demand has not yet started on a large scale and external demand has deteriorated, new orders are still in a state of contraction in March as a whole, and it may be difficult to maintain the current level of operating rate in the next two months.

According to incomplete statistics, both domestic and export orders of the aluminum plate and strip industry declined in March, and the total amount of new orders dropped by 20% to 30% compared with the same period last year; the situation in the extrusion industry is even less optimistic. Some extruded materials enterprises said that the decline in orders reached 40%, among which the decline in orders for construction profiles was more serious. Only the overall order situation of the aluminum foil industry is still good, especially in the production enterprises of double zero foil and household foil, the domestic and foreign orders in March are basically the same as the same period last year or increased slightly, however, the order volume of drug foil decreased to a certain extent in March, mainly due to the normal return of various enterprises to step up the production of drug foil when the early epidemic broke out. In addition, due to the closure of the community, unable to provide door-to-door installation and services, shopping malls closed, unable to sell and many other adverse factors, domestic air conditioning production fell sharply by 40.2% from January to February. With the resumption of social activities, air conditioning production and sales will gradually pick up, and air conditioning foil orders have shown signs of warming up.

While domestic demand has not yet been fully repaired, signs of deterioration of external demand are beginning to emerge. Since mid-March, with the continuous escalation of the epidemic situation abroad, the impact of the large-scale shutdown of foreign manufacturing on the demand for raw materials began to be transmitted to China's aluminum export sector, which triggered pessimistic expectations for the export market in the coming months; coupled with the warming impact of the trade war, export pressure will continue to increase. Some companies even said that export orders in late March had been halved, and that the collapse in foreign demand in the second quarter would exceed that in 2008.

The backlog of finished products is serious and the financial pressure is unprecedented.

At a time when the market demand is getting warm and cold, the recent sharp decline in aluminum prices has also brought great pressure on the production and operation of aluminum processing enterprises. The main contract of Shanghai Aluminum fell to 11275 yuan / ton on March 23, the lowest since February 2016, and down 2825 yuan / ton, or 20%, compared with 14100 yuan / ton on the last trading day before the Spring Festival. Aluminum prices fell sharply, on the one hand, resulting in a large area of order breach phenomenon, aluminum processing plants more difficult to ship, a large backlog of finished products and products; on the other hand, downstream customers in a wait-and-see state led to the reduction or postponement of new orders. It is understood that the inventory of finished products in many enterprises has been close to a month's output, the number of products is also significantly higher than the normal level, the financial pressure of enterprises is unprecedented. Companies also worry that as downward pressure on the global economy increases, global markets may face an unprecedented wave of debt defaults, while increased systemic risks will further push up corporate financing costs.

Overall, the sudden novel coronavirus epidemic has had a huge impact on the global aluminum industry chain. Although the number of aluminum orders has recovered recently compared with the most serious period of the epidemic, in the context of relatively moderate macro-stimulus policies, the recovery of domestic consumption is slow; the sharp decline in foreign terminal consumer demand and the increased risk of downstream enterprises shutting down or closing down; superimposed sharp fluctuations in aluminum prices, enterprise inventory increase, increased payback risk and other comprehensive factors, the normal implementation of signed orders and the signing of new orders will face great pressure. In addition, in the face of the global epidemic, trade protectionism has not stopped. Since the beginning of the year, China has suffered a number of trade friction cases from the United States, Turkey, Canada, the European Union, Australia, Argentina, Brazil, Mexico and so on. The products include aluminum strands, aluminum cables, aluminum braiding, aluminum slings and related products, aluminum bumpers, aluminum body stamping parts, aluminum profiles, aluminum extrusions, aluminum plates, aluminum foil, aluminum pre-coated photosensitive plates, aluminum discs, etc.

To sum up, the production and operation of the domestic aluminum processing industry will face greater challenges in the next two months, and the demand will be repeated. The inflection point in the operation of the industry stage mainly depends on when the control of the epidemic situation in foreign countries begins to improve. The domestic stimulus policies that have been introduced one after another will form a certain support to the market, but the overall recovery will still take a long time.

 
Pub Time : 2020-04-08 15:31:07 >> News list
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