July 2, 2026 –
This week, the operating rate of leading downstream aluminum processing enterprises in China edged down 0.4 percentage points WoW to 62.6%, as the off-season characteristics deepened across the industry and operating rates trended weaker across all segments. The operating rate of primary aluminum alloy edged up 0.2 percentage points to 59.6%, with enterprises focusing on delivering long-term contracts. Although lower aluminum prices boosted inquiry activity, downstream users remained cautious about further price pullbacks and adopted a wait-and-see approach to procurement, limiting incremental new orders. The operating rate of aluminum plate/sheet and strip slid 0.6 percentage points to 70.0%, pressured by weak demand for ordinary commercial sheets and plates and an intensifying trend among automakers to replace steel with aluminum. Cargo pick-up by long-term contract clients slowed notably. The operating rate of aluminum wire and cable dropped 0.4 percentage points to 69.0%, mainly due to the closure of the aluminum stranded wire export window and losses on export orders. As previously backlogged export orders were fulfilled, new order intake was insufficient. Domestically, orders from the power grid were limited in scale and provided weak support. The operating rate of aluminum extrusion pulled back 0.7 percentage points to 53.7%. Construction extrusion was doubly pressured by bearish sentiment triggered by falling aluminum prices and the off-season, with procurement enthusiasm remaining low. In industrial extrusion, mild demand growth for energy storage equipment provided marginal support, but automotive aluminum extrusion weakened, affected by accelerating car model iteration and diluted orders. The operating rate of aluminum foil fell 0.4 percentage points to 71.7%, as pharmaceutical foil and food packaging foil entered their off-seasons. The production schedule for air-conditioner foil continued to decline, and clients showed a weak willingness to pick up goods, making inventory reduction the top strategy for enterprises. The operating rate of secondary aluminum decreased 0.5 percentage points to 51.8%. Tight tax invoices and insufficient supply of compliant aluminum scrap kept costs high, while the downstream off-season persisted with procurement limited to rigid demand. Some enterprises considered increasing the substitution ratio of A00 primary aluminum, but economic feasibility was limited. Overall, the aluminum processing industry was under comprehensive pressure this week from a deepening off-season, persistently weakening aluminum prices fueling widespread bearish sentiment, and export contraction, with only a few niche segments like energy storage providing marginal support. The operating rate is expected to continue trending downward in the short term.
Primary Aluminum Alloy: This week, the operating rate of primary aluminum alloy at leading Chinese enterprises was 59.6%, up slightly by 0.2 percentage points WoW, maintaining stable operations overall. On the supply side, leading enterprises still focused on delivering long-term contracts, with no significant adjustments in production pace and no major changes to production schedules, as overall operating levels remained aligned with existing order requirements. On the demand side, aluminum prices recently declined, leading to a certain increase in inquiry frequency, but actual transactions remained cautious. As the market currently operates mainly on a point-pricing model, aluminum price fluctuations noticeably affected the sentiment of both buyers and sellers. Some downstream and trading segments worried about significant subsequent price volatility and adopted a wait-and-see approach to procurement, with little willingness to stockpile proactively. Thus, while the price pullback generated some inquiry activity, it has not effectively translated into significant order increments, providing limited support to enterprise operating rates. In summary, current order delivery among leading enterprises remains relatively stable, but the release of new demand is insufficient, leaving enterprises lacking momentum to significantly raise operating rates. Going forward, the operating rate of leading primary aluminum alloy enterprises is expected to hover around current levels, moving sideways near 59.6% in the short term.
Aluminum Plate/Sheet and Strip: This week, the operating rate of leading aluminum plate/sheet and strip enterprises slid 0.6 percentage points WoW to 70.0%. At the operational level, persistently weakening aluminum prices—cumulatively down 340 yuan/mt during the week to 22,850 yuan/mt—combined with the deepening traditional off-season, significantly escalated business pressure. Although leading enterprises endeavored to stabilize production by adjusting their product mix, the overall operating rate remained clearly under pressure. Regarding orders, previously contracted orders were still being executed. On domestic demand: consumption of automotive sheets and plates pulled back slightly, with the trend of automakers substituting steel for aluminum continuing to deepen; end-use demand for ordinary commercial sheets and plates stayed sluggish, making downstream cargo pick-up difficult and significantly slowing the cargo pick-up pace of long-term contract clients. In the short term, while export orders and energy storage demand provide a certain floor of support, the deepening traditional off-season effect, intensifying aluminum price volatility, and spreading downstream wait-and-see sentiment jointly pressured operating performance. The operating rate is expected to continue trending downward.
Aluminum Wire and Cable: This week, the operating rate of the domestic aluminum wire and cable industry was 69.0%, down 0.4 percentage points WoW. The industry's operating rate ended its previous trend of fluctuating at highs, showing a marginal pullback. The main reason was the closure of the aluminum stranded wire export window and persistently evident losses on export orders. After previously backlogged export orders were gradually delivered, some enterprises lacked sufficient new order intake in hand and proactively reduced production loads, leading to a weaker capacity utilization rate. Domestically, while the State Grid maintained a certain delivery pace, current order volumes were relatively limited, providing weak support to the overall operating rate, with conductor-type orders showing mediocre performance. Against the backdrop of significantly contracting export orders and no clear successor in incremental domestic demand, the industry's order structure weakened, and enterprises' enthusiasm for scheduling production declined. In summary, the aluminum wire and cable industry faces certain pressures on both supply and demand sides in the short term, and the operating rate is expected to continue trending downward.
Aluminum Extrusion: This week, the operating rate of aluminum extrusion pulled back 0.7 percentage points WoW to 53.7%, extending the off-season's weak pattern. On the construction extrusion side, persistently declining aluminum prices recently fostered bearish sentiment among downstream terminals, significantly suppressing purchasing enthusiasm. Simultaneously, as the traditional off-season deepened, consumption of home decoration doors and windows weakened seasonally; the trend of weak new orders from commercial housing projects persisted. Overlapping multiple pressures, the operating rate of construction extrusion continued to weaken this week. On the industrial extrusion side, demand for aluminum extrusions used in energy storage equipment and radiators maintained mild growth, with some enterprises recently reporting significant order increments for aluminum extrusion laser equipment accessories, providing certain marginal support for the overall operating rate. However, for automotive aluminum extrusion, some enterprises reported that accelerating car model iteration and a noticeable increase in similar competing models in the new energy vehicle (NEV) market diluted the sales of the car models corresponding to their in-hand extrusion orders, leading to lower downstream demand and dragging down the operating rate. As the industry off-season continues to deepen, the operating rate of the aluminum extrusion industry is expected to trend downward in the short term.
Aluminum Foil: This week, the operating rate of leading aluminum foil enterprises fell 0.4 percentage points WoW to 71.7%. At the operational level, the traditional off-season effect continued to deepen from July to August, with pharmaceutical foil and food packaging aluminum foil simultaneously entering their off-seasons and downstream clients lacking the desire to stockpile. Some enterprises have arranged intermittent holidays due to insufficient orders, significantly escalating business pressure. On the order structure front, the air-conditioner foil segment remained under pressure—the domestic sales production schedule for household air conditioners still fell 17% in July, and production schedules for air-conditioner foil are expected to decline further. Meanwhile, persistently weakening aluminum prices significantly dampened market sentiment, with downstream clients showing insufficient willingness to pick up goods. Processing enterprises began to reorganize their order structures, delaying production for stockpiling-type orders. Currently, the primary strategy for enterprises is to control production schedules and prioritize inventory reduction. In summary, the deepening off-season effect, aluminum price fluctuations, and slower client cargo pick-up will jointly suppress operating performance, and the aluminum foil operating rate is expected to trend lower in July.
Secondary Aluminum: This week, the operating rate of leading secondary aluminum enterprises fell 0.5 percentage points WoW to 51.8%, with capacity release continuously constrained by dual pressures from raw materials and demand. On the raw material front, affected by tight tax invoices, undersupply of compliant aluminum scrap, and traders holding back from selling, scrap aluminum purchase prices stayed high, keeping enterprises' cost side under sustained pressure. During the week, primary aluminum prices pulled back rapidly, drawing market attention to the feasibility of substituting some aluminum scrap with A00. Some enterprises indicated they would moderately increase the A00 addition ratio to alleviate difficulties in sourcing compliant scrap and the lack of invoices. However, ADC12 production still requires the addition of alloying elements like copper and incurs processing costs such as remelting loss, making the actual economic advantage of A00 less prominent. At this stage, this is more about optimizing the batching structure rather than large-scale substitution. On the demand side, the downstream off-season persisted, with die-casting enterprises seeing limited new orders and a relatively weak recovery in end-use demand, including from the automotive sector. Despite the price pullback during the week, no significant signs of restocking at lower prices emerged downstream; procurement remained primarily driven by rigid demand, market transactions were mediocre, and demand provided limited pull to production. Overall, against a backdrop of tight invoice sources, stricter compliance supervision, and still-insufficient aluminum scrap supply, the raw material supply pressure on secondary aluminum enterprises is unlikely to ease in the short term. If end-use demand shows no clear improvement, the industry's operating rate still faces the possibility of further decline.
(SMM Aluminum Team)
![Expectations for US Fed Rate Hikes Delayed, Aluminum Prices' Short-Term Weakness Hard to Break [SMM Aluminum Morning Meeting Summary]](https://imgqn.smm.cn/usercenter/tXCfs20251217171653.jpg)
