Post-holiday restarts lift aluminum processors’ operating rates; demand still soft [SMM weekly survey]

SHANGHAI, Oct 15 (SMM) —

Operating rates at China’s leading downstream aluminum processors averaged 61.7% this week, up 1.2 percentage points WoW, as post-holiday restarts and a backlog of orders cleared during the National Day break lifted activity across most sectors. Secondary aluminum and aluminum wire & cable posted the biggest gains, extrusion edged higher, primary alloy and foil held flat, while plate, sheet & strip slipped.

Primary alloy: Producers ran at 60.2%, unchanged WoW. Schedules stayed on track and volumes continued to be absorbed by long-term contracts. Auto output improved from earlier levels, but the recovery was modest. Softer aluminum prices brought buyers back to enquire, though restocking stayed cautious. A mild pickup is likely next week.

Plate, sheet & strip: Operating rates fell 0.2 percentage points to 69.2%. Aluminum prices slid steadily after the holiday, losing 360 yuan/t on October 15 alone, and buyers held back on pickups. Q4 order books remain patchy with no sizeable new demand in sight, and November–December brings both a demand vacuum and the exhaustion of orders pulled forward earlier in the year. LME aluminum below USD 3,000/t has squeezed export margins. Upside looks limited, with a risk of faster declines into November–December.

Wire & cable: Operating rates rose 1.0 percentage point to 64.8%, the highest since mid-September. Maintenance finished after the holiday and output ramped up, while firmer aluminum rod consumption pulled drawing and stranding load higher. State Grid tenders reached about 122,000 t in September; deliveries usually start about five months out, putting the peak in February–March next year and roughly half the volume in Q1. Q4 will mainly absorb existing orders, and export inquiries stayed thin. Further recovery is expected.

Extrusion: Operating rates rose 0.3 percentage points to 53.0%. Lower aluminum prices encouraged architectural buying, and orders backlogged over the holiday were scheduled in. Industrial extrusion held firm, with new-energy vehicle demand steady and one Guangdong producer reporting healthy October schedules, though some Anhui producers trimmed volumes of low-margin photovoltaic frame orders. Rates should stay firm.

Foil: Operating rates held at 71.1%. Packaging demand outperformed last year and aseptic packaging order books were comfortably full. In air-conditioner foil, October household AC output plans improved, but downstream inventories are still being drawn down; even with year-end targets to meet, customers are cutting stocks first, so any order recovery depends on destocking finishing. Rates should stay flat, with AC foil still capping gains.

Secondary aluminum: Operating rates jumped 6.5 percentage points to 52.1% from pre-holiday levels as plants restarted, though the level remains below last year. Softer prices eased feedstock costs, but tight compliant scrap and stricter tax-invoice supervision kept a lid on output. “Silver October” demand disappointed, with only limited bargain-hunting. Rates should hold broadly flat, with little room to rise further.

In short, post-holiday restarts and softer prices lifted the headline rate, but underlying demand has yet to turn, peak-season performance remains lacklustre and cost and feedstock constraints persist. Divergence across sectors is likely to continue.

(SMM Aluminum Team)