The demand for ordinary rods has weakened significantly, with sporadic orders for aluminum wire mid-week [SMM Analysis]

On August 25, 2024, the ex-factory average processing fee for 1A60 ordinary aluminum rods in Shandong was 500 yuan/mt, down 50 yuan/mt; in Henan, the processing fee for 1A60 aluminum rods remained largely stable at 500 yuan/mt; in Inner Mongolia, the ex-factory processing fee for 1A60 aluminum rods was 330 yuan/mt, down 120 yuan/mt; the average processing fee on delivery-to-factory basis for ordinary rods in South China was 600 yuan/mt; in Hebei, the average processing fee on delivery-to-factory basis for 1A60 aluminum rods was 550 yuan/mt; and in Jiangsu, the average processing fee on delivery-to-factory basis for 1A60 aluminum rods was 650 yuan/mt. Due to the strong rebound in aluminum prices and the impact of previous concentrated market restocking, the rigid procurement demand in the market has weakened, and the wait-and-see sentiment has intensified, leading to a decline in aluminum rod processing fees. Additionally, with the rise in aluminum prices, the end-user overhead line orders may slow down, and the enthusiasm for picking up goods is shifting towards a slowdown. Given the poor rigid demand, it is expected that aluminum rod processing fees will remain weak in the short term.

Last week, the operating rate of leading enterprises in the domestic aluminum wire industry remained stable at 69%. Recently, there have been no significant new orders in the aluminum wire market, only sporadic orders or tenders from provincial grids, with overall order growth not showing a significant MoM increase. In terms of operations, leading enterprises have many backlog orders to be delivered this year, currently operating under load, with no significant changes in the overall trend. The overhead line orders have slowed down recently, and the operating rate of small and medium-sized enterprises has shown a slight weakening trend. In the raw material market, the recent strong rebound in aluminum prices has led to increased wait-and-see sentiment among buyers. Aluminum rod enterprises have lowered processing fees to sell at low prices, while aluminum rod traders mainly hold prices firm, with mediocre market transaction sentiment. Based on the current production scheduling status of aluminum wire, the industry's operating rate is expected to remain at a medium-high level.