7.17
This week, the operating rate of leading aluminum downstream processors in China recorded 61.3%, down 0.6 percentage points WoW. The traditional off-season effect continued to deepen, with operating rates broadly under pressure across all segments. Only aluminum extrusion managed a slight counter-seasonal rebound, boosted by the new energy sector. The primary aluminum alloy operating rate edged down 0.2 percentage points to 59.4%, as enterprises focused on delivering long-term contracts and downstream wait-and-see sentiment suppressed demand growth, resulting in generally stable operations. The aluminum plate/sheet and strip operating rate held steady at 69.4%. General-purpose sheets remained persistently weak and can stock orders were diverted, but strong demand from the ESS sector provided support, while risks from environmental protection-driven production restrictions remained to be seen. The aluminum wire and cable operating rate fell sharply by 3.0 percentage points to 63.6%, as the aluminum stranded wire export window closed, new overseas orders weakened, and State Grid cargo pick-up pace slowed. Simultaneously weakening internal and external demand led to an accelerating decline in the capacity utilization rate. The aluminum extrusion operating rate edged up 0.2 percentage points to 53.3%. Booming demand for industrial extrusion for energy storage and PV pulled the rate higher, but off-season weakness in construction extrusion coupled with rebounding aluminum prices driving up costs weighed on the overall increase. The aluminum foil operating rate fell 0.5 percentage points to 70.9%, as the triple pressure of deeply weak air-conditioner foil, softening off-season packaging foil, and high inventories remained difficult to relieve in the short term. The secondary aluminum operating rate slipped 0.3 percentage points to 51.1%. Tight supply of compliant aluminum scrap, high procurement costs, and a pullback in downstream orders due to end-user high-temperature holidays led operating rates to continue probing lower. Overall, the deepening off-season effect coupled with fading support from aluminum wire and cable exports intensified downward pressure on industry operating rates. In the short term, aside from aluminum extrusion, which is expected to maintain some resilience supported by the new energy sector, other segments will remain under pressure.
Aluminum plate/sheet and strip: This week, the operating rate of leading aluminum plate/sheet and strip enterprises held steady MoM at 69.4%. On the operational front, environmental protection-driven production restriction notices were issued in some areas of Henan this week, but key plate/sheet and strip hubs such as Gongyi and Luoyang have yet to receive relevant feedback. Leading enterprises maintained a stable production pace, though the overall industry continued to face the dual pressure of insufficient orders and high finished product inventories. By product, end-use demand for general-purpose sheets remained persistently weak, while orders for 1xxx/3xxx series cast-rolling products continued to decline MoM. Regarding domestic can stock demand, orders diverted from a leading North American rolling mill have now been fully reclaimed. In addition, ahead of the implementation of new packaging national standards in September, downstream client stockpiling sentiment was subdued. Only the export segment maintained some resilience, with overall H2 pressure remaining significant. The ESS sector continued to exhibit strong momentum, with full-year demand expected to reach 946 GWh, and high-voltage delivery pressure persisting throughout the year, providing sustained order support for related plate/sheet and strip products such as battery cases and brazing materials. In the short term, the diversion of can stock orders and the unfolding traditional off-season effect, combined with potential risks from environmental protection-driven production restrictions, are expected to keep the operating rate of leading aluminum plate/sheet and strip enterprises in the doldrums. Aluminum foil: The operating rate of leading aluminum foil enterprises fell 0.5 percentage point WoW to 70.9% this week, as the traditional off-season effect from July to August continued to deepen. By product, in packaging foil, production and sales dropped by 10-20% MoM during the off-season, and production schedules for export orders have been extended to September. Some enterprises recently began taking on October export orders. After the price spread between Chinese and overseas markets pulled back, the intake of new orders will be a key observable variable for the export turning point in Q4. The air-conditioner foil segment became the main drag on the overall aluminum foil operating rate in the short term, with some producers reporting that their production schedules were revised down by 25-30% MoM. Amid spreading downstream sentiment of fearing price declines, clients were reluctant to pick up goods. Processing enterprises generally prioritized controlling production schedules and reducing inventories as their primary strategy, but destocking results have so far fallen short of expectations. In summary, the triple pressures of deep weakness in air-conditioner foil, the off-season effect in packaging, and high inventories will be difficult to relieve in the short term, and the aluminum foil operating rate will continue its downward trend.
Aluminum extrusion: The weekly operating rate of the aluminum extrusion industry recorded 53.3% this week, edging up 0.2 percentage point WoW. Demand for industrial aluminum extrusion used in energy storage remained strong this week. Some sampled enterprises had sufficient orders on hand in the energy storage segment, which will support their operating rates at high levels this month. For PV aluminum extrusion, downstream module enterprises' demand in H2 was overall better than in H1. Leading PV frame enterprises had ample order backlogs, and their production schedules this month were full. Meanwhile, according to the SMM survey, demand for general-purpose industrial extrusion also saw a marginal recovery this week. In summary, industrial extrusion was boosted by the new energy sector this week, lifting the industry's overall operating rate. In contrast, construction extrusion continued to see downstream orders shrink due to the traditional off-season. Meanwhile, the recent rebound in aluminum prices drove up raw material costs. Terminal engineering and home decoration clients in construction extrusion faced profitability pressure and became more cautious in placing orders. Under the double constraints of the off-season and rising raw material prices, the operating rate of construction extrusion declined again this week. In summary, demand resilience for industrial extrusion remains sufficient, but the weak trend of construction extrusion in the off-season has not changed. Dragged down by construction extrusion, the operating rate of the aluminum extrusion industry is expected to be in the doldrums next week. Secondary alloy: The operating rate at industry-leading secondary aluminum enterprises fell by 0.3 percentage points WoW to 51.1% this week. Constrained by three factors—tight supply of compliant raw materials, high procurement costs, and a deepening traditional consumption off-season—production enthusiasm continued to be dampened, industry-wide production cuts showed no significant improvement, and the operating rate extended its downward trend. Raw material side, the circulation of compliant aluminum scrap remained tight, the price difference between primary metal and scrap stayed low, procurement costs stayed high, and cost pressure on the production side continued to accumulate. Demand side, as the off-season effect became more pronounced, end-use industries such as automobiles gradually entered summer breaks, downstream orders pulled back markedly, and new orders for secondary aluminum enterprises decreased. Current market procurement remained primarily need-based, and demand-side support for operating rates continued to weaken. Overall, against the backdrop of tight aluminum scrap supply and unresolved cost pressure, the industry's low operating rate environment is unlikely to improve significantly in the short term. If end-use demand remains weak, the operating rate at secondary aluminum enterprises may still have room for further downside.
Aluminum wire and cable: The operating rate of China's aluminum wire and cable industry recorded 63.6% this week, down 3.0 percentage points WoW. The industry's operating rate continued to decline significantly during the week, with reasons largely consistent with last week. The export window for aluminum wire has closed, new overseas order intake was sluggish, manufacturers' production loads fell further, and export-side support for operating rates continued to weaken. Meanwhile, the State Grid's delivery pace remained relatively slow this year, order tender progress lagged behind the same period last year, and the industry gradually entered its traditional off-season. The simultaneous weakening of both domestic and overseas demand led to an accelerated decline in capacity utilization rates. Looking ahead, as earlier export orders are fully completed, aluminum wire exports are expected to gradually return to the normal levels seen before the current profit window opened. Lacking incremental drivers, combined with limited significant improvement in State Grid delivery pace under the off-season effect, China's aluminum wire and cable industry operating rate is expected to continue its downward trend, with the operating midpoint likely to shift further lower.
Primary aluminum alloy: The operating rate of China's industry-leading primary aluminum alloy enterprises recorded 59.4% this week, down slightly by 0.2 percentage points WoW, with an overall stable operating trend. Supply side, industry leaders continued to focus on delivering long-term contracts, with no significant adjustments to production arrangements. A few enterprises made minor production adjustments this week to manage internal inventories, but no plans for major changes to production schedules were made. Overall operations remained stable, largely driven by orders on hand. Demand side, aluminum price fluctuations noticeably affected the sentiment of both buyers and sellers. Some downstream users and traders, concerned about potentially larger price swings ahead, adopted a wait-and-see approach to procurement with insufficient willingness to stockpile proactively. Overall processing fees remained unchanged, and downstream demand held stable. In summary, with relatively stable order delivery at industry leaders, enterprises lack strong motivation to significantly raise operating rates, and downstream wait-and-see sentiment suppressed demand growth. The operating rate is expected to remain around current levels in the short term, moving sideways.
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