Operating rate of leading downstream aluminum processors in China averaged 61.3% this week, edging up WoW. Entering the traditional September peak season, earlier disruptions have gradually cleared, and operating rates across most segments saw a recovery-driven rebound. The operating rate of primary aluminum alloy rose 0.6ppt to 59.6%, as the transition into peak season drove a slight increase in downstream orders. However, the overall rise in aluminum prices during the week dampened purchasing sentiment, and producers remained relatively cautious in ramping up production, leaving some room for a modest recovery in the near term. The operating rate of aluminum plate/sheet and strip held flat WoW at 69.4%. Earlier destocking freed up production capacity and energy storage orders remained stable, but canmakers' September-October peak season stockpiling has concluded, and construction sheets & plates were pressured by fear of high prices amid rising aluminum prices, leaving peak season demand less robust than expected. The operating rate of aluminum wire and cable held flat WoW at 64.0%. With aluminum prices at elevated levels, downstream buyers remained cautious about picking up goods, and State Grid local projects are not expected to ramp up until late September. The industry's recovery trajectory remains intact, but near-term upside room is limited. The operating rate of aluminum extrusion rose 0.2ppt WoW to 51.3%. Construction extrusion remained in the doldrums, while industrial extrusion performed well, boosted by orders from energy storage and new energy vehicles. PV module production schedules showed marginal pullback expectations, but current operating levels remained stable, reflecting a mild overall recovery. The operating rate of aluminum foil held flat WoW at 71.1%. Full order books for packaging foil during peak season and steady demand for new energy battery foil and brazing foil effectively offset continued weakness in air-conditioner foil, and aluminum foil operating rates are still expected to drift slightly higher. The operating rate of secondary aluminum rose 1.0ppt WoW to 52.6%. Improving end-use orders from automobiles and motorcycles supported a recovery in production schedules, but high aluminum scrap prices, rising alloy costs, and tightening tax invoice policies constrained production release, and the mild recovery trend is expected to continue. Overall, the peak season effect is gradually emerging and driving a broad recovery in industry operating rates, but a full recovery in end-use demand will take time and cost side pressures persist. In the near term, each segment is expected to continue a mild recovery trend.
Primary aluminum alloy: This week, the operating rate of leading primary aluminum alloy producers in China averaged 59.6%, up 0.6ppt WoW, extending a recovery-driven growth trend. As the traditional consumption off-season gradually transitions into the September peak season, downstream demand continued to improve marginally, with orders at some enterprises maintaining growth and providing support to upstream supply. However, the overall rise in aluminum prices during the week dampened downstream purchasing sentiment, and order growth narrowed from the previous week, though it remained in expansion territory. At the industry level, enterprises continued to focus on fulfilling annual long-term contracts, spot order activity was moderate, and overall production schedules recovered steadily. In summary, the market remains in a peak season recovery channel in the near term, but uncertainty from rising aluminum prices has increased, and producers remain relatively cautious in ramping up production. Leading producers' operating rates are expected to have some room for a modest recovery next week. Aluminum plate/sheet and strip: This week, the operating rate of industry leaders in aluminum plate/sheet and strip held flat WoW at 69.4%. At the enterprise operation level, producers concentrated on destocking during the low aluminum price phase in August, and finished product inventory pressure has eased notably from earlier levels. Production has not been further adjusted for now, but producers remain cautious about ramping up production due to the impact of new orders. By product, can makers have largely completed stockpiling for the September-October peak season, and orders on hand for September are expected to weaken, with some can stock demand support absent. For construction aluminum sheets such as curtain wall coils and insulation aluminum skins, the continuous rise in aluminum prices this week, with spot prices approaching the 20,500 yuan/mt mark, has reignited downstream fear of high prices, directly suppressing order placement and cargo pick-up activity. In the machinery manufacturing sector, hardware stamping products are seeing moderate conditions. Overall, peak season sentiment is emerging but end-use consumption lacks broad-based improvement. If aluminum prices remain at highs, procurement pace will be further constrained, and the operating rate of aluminum plate/sheet and strip lacks additional upward momentum in the short term.
Aluminum wire and cable: This week, the operating rate of China's aluminum wire and cable industry held steady at 64.0%, flat MoM, with the industry overall still in the doldrums. The signing window for the first batch of State Grid framework tenders is approaching, and the direction of order release remains unchanged. However, with aluminum prices at highs, downstream cargo pick-up willingness is cautious, and the pace of order fulfillment may face some delays. State Grid local projects are still expected to gradually start after late September, with limited boost to short-term operating rates for now. On the export side, new overseas orders remain scattered in volume and are unlikely to provide significant support. Overall, the direction of industry recovery remains intact, but in the short term, constrained by wait-and-see sentiment amid high aluminum prices, upside room for operating rates is limited. Attention should be paid to the trajectory of aluminum prices and actual order pick-up fulfillment going forward.
Aluminum extrusion: This week, the operating rate of aluminum extrusion edged up 0.2 percentage points MoM to 51.3%, with the industry continuing a mild recovery trend. The construction extrusion segment remains in the doldrums with no signs of peak season materializing yet. Orders are generally stable, with downstream procurement mainly driven by rigid demand for supporting materials, and new order release remains weak. Industrial extrusion maintained a relatively strong trend this week, benefiting from the traditional peak auto sales season and intensive launches of new car models. End-user producers accelerated their procurement pace, and orders for NEV-related extrusion continued to grow. For PV-related aluminum extrusion, recent increases in main component material prices have driven component quotes to rebound, and some downstream end-users have shown rising wait-and-see sentiment. September component production schedules are expected to edge down MoM, and PV frame producers may face slight downward pressure on operating rates going forward. However, with the current period being the early-month peak for PV frame production, operating levels remained stable this week. Overall, construction extrusion has yet to show clear improvement signals, while the recovery trend in industrial extrusion continues. Driven by the industrial extrusion segment, China's aluminum extrusion operating rate is expected to maintain a slight upward trend next week. Aluminum foil: This week, the operating rate of leading aluminum foil enterprises remained flat WoW at 71.1%. At the enterprise operation level, the aluminum foil market was generally stable during the week. Orders on hand at leading enterprises were moderate, but downstream end-users in peak season did not provide excess scheduled production orders. Peak season performance was not significant, and uncertainty persists. In terms of order structure, air-conditioner foil remained weak, continuing to drag on the overall base. For packaging foil, the current period is an order fulfillment window. Orders for single-zero and double-zero packaging foil and aseptic packaging were full, effectively offsetting the weakness in air-conditioner foil. Demand in the new energy sector was steady, and order stability for battery foil and brazing foil provided fundamental support for operating rates, with supply-demand conditions trending toward tight balance. Overall, the peak season's lift to aluminum foil demand was limited, but supported by packaging foil and battery foil, the operating rate of aluminum foil is still expected to drift slightly higher.
Secondary aluminum: This week, the operating rate of leading secondary aluminum enterprises rebounded 1.0 percentage point WoW to 52.6%. Enterprise production pace recovered marginally, but the overall operating level still lagged the same period last year. Entering the traditional September consumption peak season, orders from automobiles, motorcycles, and related end-users improved from earlier periods, and enterprises' production scheduling enthusiasm recovered accordingly, driving a modest rebound in operating rates. However, the recovery in end-use demand remained limited, and the peak season effect has yet to be fully realized. On the raw material side, aluminum prices held up well overall this week, aluminum scrap prices stayed high, and coupled with rising copper prices, comprehensive production costs for alloy enterprises further increased. Meanwhile, tax invoice policies tightened in some regions, compliant raw material procurement costs remained high, and tight raw material supply and cost pressure constrained enterprises' production release to a certain extent. If end-user orders continue to improve as the peak season progresses, enterprises' production scheduling enthusiasm is expected to improve further, and operating rates still have room to rebound. However, if demand release falls short of expectations, enterprise production recovery may still be constrained by insufficient orders and high raw material costs.
![[SMM Analysis] Persistent Weak Overseas Demand Weighs Broadly on Regional Premiums](https://imgqn.smm.cn/usercenter/hRRxy20251217171652.jpg)
