Robust Orders Face Material Shortage Risk as December Operating Rate of Secondary Aluminum Producers Stops Rising [SMM Analysis]

SMM January 13 News:

Operating Rates of Secondary Aluminum Alloy Enterprises by Region in December 2024 Survey Data: Operating Rates of Secondary Aluminum Alloy Enterprises by Scale in December 2024

Survey Data:

According to SMM survey statistics, the operating rate of the secondary aluminum industry in December 2024 slightly decreased by 1.6 percentage points MoM to 43%, ending a three-month consecutive increase.

Demand for secondary aluminum remained strong in December, with automotive consumption continuing the positive trend since Q4. According to CAAM data, automobile production and sales in December reached 3.366 million units and 3.489 million units, respectively. Production decreased by 2% MoM, while sales increased by 5.2% MoM, with YoY growth of 9.3% and 10.5%, respectively. Supported by year-end consumption in automotive and other end-user sectors, demand for secondary aluminum, especially from large manufacturers, remained relatively stable, with even an increase in orders.

However, most enterprises faced a shortage of raw materials. The supply of domestic and overseas aluminum scrap tightened in December, limiting enterprises' ability to increase operating rates. Additionally, due to insufficient raw material supply, manufacturers were cautious in taking orders, prioritizing long-established customers. Furthermore, finished product inventories of secondary aluminum enterprises were generally low, prompting manufacturers to actively procure low-cost supplies from traders to replenish inventories or fulfill orders.

In addition to material shortages, environmental protection-driven production restrictions were another major factor affecting secondary aluminum production. In December, environmental protection inspections or orange alerts were implemented in regions such as Henan, Sichuan and Chongqing, and Jiangsu, leading to a decline in operating rates of local secondary aluminum plants.

Entering January, except for secondary aluminum plants supplying liquid aluminum directly, most enterprises will begin a 5-20 day Chinese New Year holiday around mid-month, which will significantly drag down the industry's operating rate.

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Data Note: This survey covered a capacity of 12.7 million mt.

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