Aluminum Rod Inventory Surges, Processing Fees Stable Amid Post-Holiday Demand Recovery [SMM Analysis]

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According to SMM, as of February 27, 2026, the days of inventories for domestic aluminum rod plants were recorded at 12.7 days, an increase of 8.6 days from before the holiday. In terms of inventory ratio, the in-factory inventory ratio for domestic aluminum rod plants was recorded at 163.8%, indicating that the pressure of in-factory inventory buildup is not light.

After the holiday, the center of aluminum prices rebounded compared to pre-holiday levels, but market trading sentiment had not fully recovered at the beginning of the new year. Processing fee quotes showed regional differentiation but overall held prices firm. Regarding different processing fees, as of February 28, 2026, the processing fee for aluminum rods in Jiangsu region was quoted at 450-550 yuan/mt, in Hebei at 350-450 yuan/mt, and in South China at 350-500 yuan/mt. Returning to the processing fees for aluminum rods in various regions, Shandong region was quoted at 250-350 yuan/mt, Inner Mongolia at 200-300 yuan/mt, and Henan at 400-450 yuan/mt. Despite the significant trend of inventory buildup for aluminum rods due to seasonal effects, the resumption of downstream consumption was better than expected before the holiday, with clear expectations for power grid deliveries in March. The demand from downstream wire and cable factories significantly rebounded, which will further promote a recovery in the trading sentiment of the aluminum rod market. Subsequent space for inventory buildup is relatively limited, and it is expected that the processing fee for aluminum rods in March will operate on a stable and slightly strong trend.

In the first week after the holiday, the weekly operating rate of the domestic aluminum wire and cable industry rebounded to 57%, up 4 percentage points MoM, significantly higher than the pre-holiday low of 53%. The core driving factor was the continued orders from the power grid post-holiday, matching and activating enterprise orders, with the resumption of work by enterprises slightly exceeding expectations. The current seasonal low point for the industry has passed, and post-holiday cargo pick-up expectations are positive. Downstream production is expected to bottom out and recover, gradually transitioning from off-season to peak season. In the short term, close attention should be paid to the fulfillment of State Grid's March order expectations and the matching progress of old orders. If the sustainability of orders shows optimism, the downstream operating rate will present a favorable trend. The key focus will be on the pace of power grid order implementation and the strength of end-use demand recovery. It is expected that the operating rate of the aluminum wire and cable industry will rebound to 59% next week.