This week, the operating rate of aluminum downstream industry leaders in China slid 0.2 percentage point WoW to 60.1%, continuing its downward trend for several weeks. The off-season characteristics deepened across the industry, with operating rates in all sectors generally weakening or holding steady at low levels. The operating rate of primary aluminum alloy pulled back slightly by 0.2 percentage point to 58.2%. The consumption off-season, coupled with a higher aluminum price center, further suppressed downstream purchasing sentiment. Spot order transactions were sluggish, and producers mainly scheduled production based on long-term contracts, with limited motivation to ramp up production in the short term. The operating rate of aluminum plate/sheet and strip held steady at 69.0%. With aluminum prices holding up well, enterprises accelerated destocking, and some previously accumulated finished product inventories were consumed. The ESS sector maintained a high level of activity, and export orders were still being delivered. However, demand for general civil plate remained weak, with little sign of improvement, and the industry lacked confidence in stockpiling for the peak season. The operating rate of aluminum wire and cable was flat at 62.0%. Export orders for aluminum stranded wire entered the final stages, with no new orders arriving, and export support largely faded. Cargo pick-up by State Grid was slow, and PV demand fell short of expectations, putting pressure on capacity utilization. This is expected to recover only in Q4. The operating rate of aluminum extrusion slid 0.4 percentage point to 51.6%. Construction extrusion continued to decline under the double pressure of the off-season and rising aluminum prices. Although automotive extrusion saw some stockpiling growth for the peak season, high temperatures extended lunch breaks, curbing production release, and overall operating rates remained under pressure. The operating rate of aluminum foil slid 0.5 percentage point to 70.1%, with air-conditioner foil remaining the biggest drag. In August, operating rates at some enterprises fell another 30% MoM, packaging foil production schedule was reduced by 10-15%, and only battery foil provided a hedge due to strong ESS growth. The operating rate of secondary aluminum remained steady at 49.4%, still at a low level compared to the same period in recent years. Policies eased marginally, but the quota for invoice issuance was limited. Supply of compliant aluminum scrap was tight and costs remained high. Coupled with the impact of high-temperature holidays on demand, it will be difficult for operating rates to see a significant rebound in the short term. Overall, this week the aluminum processing industry remained in the doldrums under the dual pressure of deepening off-season effects and the aluminum price rebound. Export support faded, and recovery in domestic demand was slow. It is expected that the overall operating rate of the aluminum processing industry will maintain a weak trend in August.
Primary aluminum alloy: This week, the operating rate of China’s primary aluminum alloy industry leaders recorded 58.2%, edging down by 0.2 percentage points WoW, and the overall market remained sluggish. Amid the traditional consumption off-season, overall downstream demand was lackluster. Enterprises’ production schedules focused primarily on delivering long-term contracts, while new spot orders were extremely limited, causing overall orders to edge down from the prior period. Meanwhile, the center of aluminum prices continued to rise during the week, further dampening downstream purchasing sentiment. Activity in inquiries and spot transactions cooled significantly, with most enterprises staying on the sidelines and showing little willingness to proactively ramp up production. Overall, the situation of declining spot price quotations and thin market trading is unlikely to improve in the short term. August production is expected to be lower than that of July, and the market lacks clear positive drivers in the near term. Next week, operating rates of industry leaders are expected to stay at current levels and remain in the doldrums, with a possibility of pulling back slightly further.
Aluminum plate/sheet and strip: This week, the operating rate of aluminum plate/sheet and strip industry leaders held steady MoM at 69.0%. On the corporate operations side, against the backdrop of short-term firm aluminum prices, enterprises accelerated destocking, and previously accumulated finished product inventories were somewhat digested. In terms of orders, as the off-season deepened, end-use demand for ordinary civilian sheets & plates and general plates in China stayed persistently sluggish. The ESS sector maintained high prosperity, while previously received export orders were still being intensively scheduled and delivered. Looking ahead, stockpiling behavior during the off-to-peak season transition in August will be a key observation point. However, the industry currently generally lacks confidence in peak-season stockpiling consumption expectations. Controlling production and reducing inventory remain the main themes. The aluminum plate/sheet and strip operating rate is expected to run steadily at low levels.
Aluminum wire and cable: This week, the operating rate of China’s aluminum wire and cable industry recorded 62.0%, flat WoW. During the week, the industry’s operating rate maintained a pattern of operating in the doldrums. Export orders for aluminum stranded wire have entered the final execution stage, with new orders continuing to be absent, and support from exports for operating rates has largely faded. Domestically, the pace of State Grid’s cargo pick-up remained slow, and domestic demand was mediocre. Combined with PV sector demand falling short of expectations, overall end-use consumption was weak, and the industry’s capacity utilization rate was under pressure. Looking ahead, as State Grid’s fourth batch of material tender orders for power transmission and transformation enters concentrated delivery in Q4, coupled with the year-end grid connection rush in PV potentially driving related wire and cable consumption, domestic demand in Q4 is expected to gradually recover. However, in the short term, Q3 domestic demand still faces downward pressure on operating rates. Aluminum Extrusion: This week, China’s aluminum extrusion industry recorded a weekly operating rate of 51.6%, down 0.4 percentage points WoW. As the off-season deepened, demand for architectural extrusion continued its downtrend, with project-based orders remaining weak. Aluminum prices drifted higher during the week, further suppressing end-user purchase willingness. Combined with a simultaneous decline in channel orders, enterprises reported that sporadic new orders on hand were insufficient to offset the off-season impact, and the industry’s operating rate fell under pressure. Industrial extrusion remained largely stable this week, with no significant fluctuations in demand across sectors. According to feedback from some enterprises in Shandong, driven by stockpiling for the traditional peak auto sales season, demand for automotive aluminum extrusion saw some growth early in the month, but the ongoing heatwave led to extended midday breaks at plants, placing some constraints on production. Overall, under the combined effect of the summer heat and the deepening off-season, the aluminum extrusion industry’s operating rate is expected to remain in the doldrums in the near term.
Aluminum Foil: The operating rate of industry-leading aluminum foil enterprises fell 0.5 percentage points WoW to 70.1% this week. At the enterprise operations level, the traditional off-season continued to deepen, July-August. Air-conditioner foil remained the biggest drag, as air-conditioner end-users were in the midst of a large-scale summer equipment maintenance plan; following a July pullback, some air-conditioner foil enterprises saw their operating rates sequentially fall by another roughly 30% in August. For packaging foil, the August production schedule for single and double zero foil is expected to decrease by 10-15%, with a concurrent reduction in new export orders. The battery foil segment remained relatively optimistic—the overall vehicle market performed well, and coupled with high growth in energy storage, the supply-demand balance trended toward a tight balance. All things considered, the deep decline in air-conditioner foil and the packaging off-season effect remained the dominant factors, and aluminum foil production is projected to contract further in August, with the operating rate continuing its downtrend.
Secondary Aluminum: The operating rate of industry-leading secondary aluminum enterprises held steady at 49.4% WoW this week, remaining at a historical low for the same period in recent years. On the raw material side, some regions reported marginal easing on the policy front, but invoicing quotas remained relatively limited, providing scant impetus for production. Compliant aluminum scrap supply remained tight, and scrap prices stayed firm, offering no relief from enterprises’ procurement cost pressure. On the demand side, affected by heat-related holidays, downstream order release was insufficient, end-user purchases were limited to rigid demand, and enterprises’ willingness to schedule production remained weak. Constrained by both cost pressure and off-season demand, the operating rate is expected to stay low in the short term; future focus will be on the recovery pace of end-user orders and changes in tax and invoice policies.
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