Aluminum prices remained high before the holiday, and aluminum rod processing fees remained under downward pressure [SMM analysis]

The Labour Day holiday is coming to an end and the market will re-enter the trading. How will the market change after the holiday? Let us first review the market before the holiday. On April 30, 2024, the average ex-factory price of 1A60 general aluminum rod processing fee in Shandong remained stable at 350 yuan/ton, and the actual transaction price was lower than the average price; the processing fee of 1A60 aluminum rod in Henan was 300 yuan/ton; the processing fee of 1A60 aluminum rod in Inner Mongolia was 150 yuan/ton; the average processing fee of general rods in South China was 450 yuan/ton. On the last trading day of April, as aluminum prices remained strong and companies' stocking was coming the end, the aluminum rod market was not doing well. Companies lowered processing fees to sell before the holiday and ease cash pressure.

Since April, the rigid demand of downstream enterprises has been gradually released, and the transaction sentiment of the aluminum rod market has been gradually recovering. The actual transaction price has rebounded significantly compared with March. However, due to high aluminum prices, the downstream purchasing sentiment is still cautious. In addition, the strong performance of aluminum prices prevented aluminum rod processing fees from going up, and the processing fees have been slow to return to the peak season level. Regarding the classification of aluminum rods, companies said that the market orders for high-conductivity rods and alloy rods improved recently, and some companies transferred part of their production capacity from ordinary rods to high-conudctivity rods and alloy rods. Therefore, the pressure on the supply of ordinary rods has also been alleviated. In May, supported by UHV orders and driven by the delivery pressure of photovoltaic orders in the market, the overall operating rate of the aluminum wire and cable industry is expected to remain high, and the demand for aluminum rods is expected to further pick up. However, under the influence of high aluminum prices, the overall processing fee of aluminum rods is expected to remain stable.