In March 2024, the existing domestic aluminium rod capacity was 7.412 million mt. The domestic aluminum rod production totalled 355,000 mt in March, up 37,000 mt or 11.64% MoM. The operating rate of aluminium rod industry was 57.5%, up 5.2% MoM.
In traditional peak season in March and April, the operating capacity gradually recovered, boosting the operating rate and output. However, as aluminum prices continued to rise in March, downstream wire and cable companies were cautious in purchasing. Aluminum rod companies reported poor shipments and leftover inventories. Affected by market competition and inventory, companies in Inner Mongolia and Yunnan reduced production, affecting an annual operating capacity of 72,000 mt. At the same time, a new production line of an aluminum rod processing enterprise in Henan was officially put into production in March, with an annual production capacity of 72,000 mt. The new production line of an aluminum rod enterprise in Shandong is still in capacity ramp-up, and one production line is still to be installed. The annual production capacity added in March was 36,000 mt, and the total new production capacity was 108,000 mt.
Shandong saw its monthly output increased by 8,000 mt, up 6% MoM, due to the capacity ramp-up of a processing company. In Shanxi, Ningxia and Guizhou, monthly output rebounded significantly due to the recovery of local companies' operating capacity. Compared with February, Shanxi's monthly output rose by 6,000 mt, that of Ningxia rose by 5,000 mt, and that of Guizhou rose by 4,300 mt. In Henan, due to new production capacity and capacity recovery, its output in March increased by 3,500 mt, up nearly 20% MoM. In addition, except for the reduction in operating capacity in Inner Mongolia and Yunnan, the production capacity in other regions was relatively stable.
In terms of processing fees, during March, the ex-factory processing fee for series 1-series general rods in Shandong was 400 yuan/mt-500 yuan/mt, and the average ex-factory processing fee was 455 yuan/mt, an increase of 30 yuan/mt MoM; the ex-factory processing fee in Henan was 350 yuan/mt -400 yuan/mt, the average processing fee was 363 yuan/mt, down 47 yuan/mt; the ex-factory processing fee of general rod processing fees in Inner Mongolia was between 150 yuan/mt and 250 yuan/mt, with an average of 211 yuan/mt; in Guangdong, the processing fee was between 450-500 yuan/mt, with an average of 477 yuan/mt, down 10 yuan/mt MoM. Affected by high aluminum prices, downstream aluminum wire and cable companies were more cautious in purchasing. Amid fierce competition in Hebei and Jiangsu, the actual transaction prices were generally lower than the quoted prices. Meanwhile, the supply was in a surplus. Aluminum rod holders gained certain profit margin due to the rising aluminum prices, but they reduced processing fees to ship goods, intensifying market competition, and pressuring on processing fees.
In April, the supply may continue to remain stable. However, the purchasing sentiment of downstream companies were curbed by high alumium prices, and the inventory pressure may persist. Demand from State Grid will continue to be released. However, under inventory pressure and high aluminum prices, processing fee may be largely stable in April.
![Abnormal Inventory Accumulation of Aluminum Ingots in South China in Mid-to-Late March [SMM Analysis]](https://imgqn.smm.cn/production/admin/votes/imagesqsDLb20240416161800.jpeg)
