The holiday dragged down the operating rate of aluminum processing enterprises, aluminum price surged, and the downstream delivery volume decreased [SMM downstream weekly survey]

The average operating rate across major aluminum processing enterprises decreased by 0.5 percentage point from a week ago to 64.0% this week, down 1.2% YoY. Looking at the sectors, only the secondary aluminum alloy sector saw a slight decline in operating rate due to the suspension of production in Qingming Festival; the operating rate of aluminum plate and strip enterprises rebounded. Some companies lowered their product processing fees to seize market share, which led to a rapid increase in their own orders, but the actual increase in demand was limited. In the short term, leading companies may be able to maintain a high operating rate by exchanging price for volume, but the profitability of the entire industry is expected to be frustrated and decline.
The operating rate of other sectors is mainly stable for the time being, but aluminum prices surged during the week, the downstream fear of high prices deepened, and the enthusiasm for picking up goods suffered a shock, but there is no major impact on the production for the time being. After the holiday, the operating rate of the downstream aluminum industry is expected to rise slightly due to the resumption of work.
Primary aluminum alloy: The average operating rate of large primary aluminum alloy enterprises remained at 50%. Aluminum prices continued to rise this week, and the enthusiasm of downstream companies to pick up goods was suppressed to an extremely low level. However, alloy companies are still driven by the increasing the alloying ratio of aluminum liquid and maintaining market share, and are reluctant to reduce production.In the future, the primary aluminum alloy industry may continue the previous logic, and the industry's operating rate will slowly increase driven by the increase in the proportion of aluminum liquid alloying.
Aluminum plate/sheet and strip: The average operating rate of leading companies rose by 0.6 percentage point to 77%. The main reason is that some companies once again lowered the processing fees of some products to seize market share during the week, which led to a rapid increase in their own orders and a slight increase in the production pace. At present, the overall increase in market demand is almost invisible, and a new round of price war has begun to emerge. In the short term, leading companies may be able to exchange price for volume to maintain a high operating rate, but the profitability of the entire industry will drop to the next level.
Aluminum wire and cable: The average operating rate of major aluminum wire and cable companies remained stable at 60.6% this week.In the first week of April, thanks to the support of State Grid's orders, the leading aluminum cable companies maintained stable operation. According to State Grid's order performance, the pick-up of aluminum cables was concentrated in April-June, with the monthly pick-up volume exceeding 150,000 tons. The industry's shipments gradually increased, driving the industry's operating rate to stabilize and improve. Regarding procurement, the base price of aluminum has been running high recently, and the profits of aluminum wire and cable companies' orders on hand narrowed to varying degrees. Companies are still afraid of high prices, and procurement is mainly based on rigid demand, and production enthusiasm has been suppressed. However, under the pressure of State Grid's order delivery, enterprises have no choice but to increase their operating rates to produce finished products for delivery, and the steady upward trend of the industry has not been changed.
Aluminium extrusion： The overall operating rate of aluminum extrusion recorded at 62.30%, flat WoW. Looking at the sectors, there are both increases and decreases in market segments. In the building extrusion market, urban village renovation projects have been launched in some areas, and orders from regional leading building profile companies have slightly recovered, but due to the high aluminum prices, the order volume is relatively small. In the industrial extrusion sector, the photovoltaic and automobile industries of the new energy industry maintained stable operation. Among them, there was no obvious recovery in demand for new energy vehicles. Photovoltaic module manufacturers expected to purchase frames for April after the holiday, but aluminum prices surged and purchasing volume declined. Overall, the aluminum extrusion industry maintained stable operation this week, and companies mostly purchased on demand as aluminum prices were high.
Aluminum foil: The average operating rate of large aluminium foil enterprises remained at 76.7% this week. The aluminum foil market remained relatively stable this week, and there were no major changes in the demand for products such as packaging foil, battery foil, and air-conditioning foil. Although high aluminum prices continue to dampen the enthusiasm of downstream customers to pick up goods, they have not affected the production of large aluminum foil companies. Operating rates at major aluminum foil enterprises will remain flat.
Secondary aluminium alloy: The average operating rate of large secondary aluminium alloy enterprises was down by 3.7% to 57.3%. Due to Qingming Festival holiday, most secondary aluminum alloy companies continued production, with only one in the sample stopping production for three days, dragging down the operating rate of production during the week. Demand performance has been general since April, and coupled with the sharp rise in aluminum prices to around 20,000 yuan/mt, downstream companies have become more afraid of high prices, and purchases are mainly based on just-in-time needs, and inventory levels before the holiday are also relatively low. After the holiday, the operating rate of the secondary aluminum alloy industry is expected to rise slightly due to the resumption of work.