Aug Aluminum Processing PMI Edges Up with Sector Divergence, Sep Return to Expansion Eyed [SMM Analysis]

In August, the composite PMI for China's aluminum processing industry recovered notably from July but remained below the 50 boom-bust line, reflecting a "weak recovery" with pronounced sector divergence. Aluminum wire & cable was the standout, driven by faster grid order fulfillment and front-loaded peak-season restocking, with new orders and exports both surging. Aluminum foil expanded steadily on resumed air-conditioner foil production and stable battery foil demand, while plate, sheet & strip returned above the threshold largely on a low-base effect, with high aluminum prices dampening restocking appetite. The remaining segments stayed in contraction.

Plate, sheet & strip: PMI hit 50.6%, with production and new orders expanding in tandem as destocking wound down and leading mills tentatively raised operating rates. However, the expansion was largely a low-base recovery—can stock restocking had largely concluded, auto sheet demand remained constrained, and high prices curbed buying. The weak recovery is expected to extend into September.

Aluminum foil: PMI reached 52.1%, powered by production and new export orders, while earlier strict output control effectively contained inventory risk. Exports, though slightly warmer, cooled markedly from Q2's peak. With the air-conditioner restocking tailwind fading in September and packaging yet to provide extra lift, the industry needs new demand drivers to hold its track.

Architectural extrusions: PMI fell to 45.3%, extending its contraction. Retail orders stayed sluggish, small and mid-sized producers limited project orders for cash-flow safety, and some small mills in Hebei and Shandong took temporary shutdowns. Export resilience persisted on sufficient long-term orders. With no clear demand recovery signal, September PMI is expected to hover just below the threshold.

Industrial extrusions: PMI stood at 48.2%, still below the line, but structural resilience was evident—energy storage, PV and rail transit demand held steady while general extrusions stayed weak, and high temperatures disrupted output. Late-month auto-related orders warmed on model-launch restocking, and a return above 50 is expected in September.

Wire & cable: PMI surged 10.1 points to 54.5%, back into expansion. New orders jumped 19.7 points and exports rose 29.8 points, while raw material stocking turned active ahead of the peak season. Production itself has yet to cross the threshold, but September PMI is expected to stay in expansion territory.

Primary alloy: PMI came in at 44.3%, contracting for a third straight month. July's low-price restocking had front-run demand, and rising costs curbed buying, leaving trading sentiment thin. September should see improvement as auto orders recover and restocking demand is released, with PMI likely returning above the line.

Secondary alloy: PMI rebounded 9.0 points to 46.7% on marginal late-month order improvement, though tight compliant scrap supply and tax invoice constraints persisted. September PMI is expected to rise back above 50 on seasonal auto and motorcycle demand, with scrap supply and tax policy developments as key watchpoints.

September outlook: With the "Golden September, Silver October" peak season approaching, the composite PMI is expected to rise to 51.9% and return to expansion. Wire & cable should lead on solid grid orders; industrial extrusions are poised to cross the line on auto restocking; and both alloy segments look set to rebound above 50. Overall sentiment should improve substantively, though the season's strength will hinge on end-demand recovery versus restocking willingness under high aluminum prices.