Last week, the operating rate of leading domestic aluminum downstream processing companies increased by 3.2 percentage points WoW to 60.2%, but fell by 2.8 percentage points YoY.
In the second week after CNY holiday, aluminum processing companies continued to resume work and production. The secondary aluminum alloy and extrusion sector saw a larger rebound in operating rate during the week. The production of large secondary aluminum alloy plants basically returned to pre-holiday levels, but the increase in orders was average; the industrial extrusion sector production resumed rapidly, but construction extrusion are still in the traditional off-season. Only aluminum extruders in Jiangsu, Zhejiang, Shanghai and part of south China reported a slight improvement in orders. Most of the orders on hand are long-term orders received before CNY or in cooperation with door and window manufacturers. Wire and cable sector is also in production resumption. However, except for the UHV orders currently in hand by major manufacturers, the demand for State Grid orders has not yet improved significantly, and photovoltaic and wind power projects have stalled. The recovery of downstream production still needs to wait for positive signals. The aluminum plate/sheet and strip industry's operating rate rebounded slightly last week, but there are expectations for further improvement in March. The primary aluminum alloy and aluminum foil markets were relatively stable, and the operating rates were mainly stable for the time being.
Overall, the increase in aluminum downstream operating rates last week was still driven by the production resumption after CNY holidays. The overall increase was slightly narrower than last week. In March, most sectors reported that the demand recovery was not as strong as expected. Whether the peak season can be realized still needs further progress.
Primary aluminum alloy
Last week, the operating rate of leading primary aluminum alloy companies was still 49%. With the end of the Lantern Festival, more and more downstream customers officially resumed work. However, many factories reported that the current demand recovery is not obvious and has not yet led to an increase in operating rates.
Aluminum plate/sheet and strip
Last week, the operating rate of leading aluminum plate/sheet and strip companies increased by 0.2 percentage points to 74.6%. The downstream market further picked up in March. It is expected that the operating rates of leading companies will have room to increase in the future. The recovery of downstream demand needs to be closely observed.
Aluminum wire and cable
Last week, the operating rate of leading aluminum wire and cable companies gradually recovered, up 2 percentage points from the previous month to 60%. Due to the delivery pressure of UHV orders, the overall operating rate of leading companies remained stable. Production of other leading companies has resumed normally after CNY holiday. However, the current new orders are not optimistic, and most of the production is the backlog of orders. According to feedback from enterprises, except for the UHV orders currently in hand by major manufacturers, the demand for orders from the State Grid has not yet improved significantly, and photovoltaic and wind power projects have stalled. We still need to wait for positive signals for the recovery of downstream production. In previous years, March and April were the traditional peak seasons for consumption in the aluminum processing industry. However, whether the aluminum wire and cable industry can enter the peak season requires close attention to the consumption demand of State Grid aluminum cables and the impact of aluminum price trends on the operating rate.
Aluminum extrusion
Domestic aluminum extrusion companies steadily resumed production in the second week after the holiday, and the operating rate last week was recorded at 50.00%, another increase of 8.00 percentage points from the previous week. In terms of sectors, construction extrusion sector is still in the traditional off-season. Only aluminum extrusion manufacturers in Jiangsu, Zhejiang, Shanghai and parts of south China reported that orders have slightly improved. Most of the orders on hand are long-term orders received before CNY or in cooperation with door and window manufacturers. In addition, some companies used CNY holidays to renovate their factories, but the projects have not yet been completed, affecting their operating rates. The industrial extrusion sector resumed production quickly, with photovoltaic and automotive extrusion operating stably. After Feb 24, all staff returned to work, and production lines are quickly resuming production, which drives the operating rate of enterprises. Although a few factories said that there are staff turnover problems after the holiday, the impact on production is small. Overall, the production resumption in the aluminum extrusion industry after the holiday is proceeding steadily. Whether downstream orders can show a peak season trend in March needs further tracking.
Aluminum foil
Last week, the operating rate of leading aluminum foil companies was still 76.5%. With the arrival of the traditional peak season in March, orders for packaging foil, air-conditioning foil, battery foil and other products have improved. If market demand continues to grow in the future, there is still room for growth in the operating rates of leading aluminum foil companies.
Secondary aluminum alloy
Last week, the operating rate of leading secondary aluminum alloy companies increased by 8.8 percentage points from the previous week to 51.3%. Previously, due to the poor production resumption in upstream and downstream sectors, low orders and insufficient raw materials, the recovery in operating rates of enterprises was restricted. With the increase in downstream operations, market transactions improved WoW. After the Lantern Festival, small and medium-sized factories gradually resumed production. The operating rates of companies that have resumed production basically returned to pre-holiday levels. The overall operating rate of the industry continued to rise. However, the recovery of demand is average, and there is no significant increase in new orders, and many die-casting factories are still digesting inventory, and the purchase volume is low. The short-term operating rate is expected to continue to rise, but the increase may not be as expected.
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