[SMM Weekly Survey] concerns remain about the sustainability of aluminum downstream processing enterprises to maintain a smooth start of consumption.

SMM, May 9, 2020:

During the epidemic period, SMM through the aluminum downstream processing leading enterprises start weekly tracking, in order to understand the most real aluminum downstream processing enterprises return to work. SMM survey samples are distributed in 12 provinces in China, a total of 41 enterprise samples, the specific distribution is as follows:

To sum up, this week the aluminum downstream leading enterprises started a small, the overall stable, the start of each processing plate is stable, still with construction, medicine and other bright spots consumer plate leading the entire aluminum downstream consumption, but consumer sustainability concerns still exist. On the one hand, the product structure is more counterpart profile, aluminum plate, strip and foil enterprises most of the existing orders can cover the whole of May; on the other hand, for the product structure is relatively scattered, especially for the export of a relatively large part of the plate and foil enterprises, although we try our best to adjust the product structure, but most of them say that it is difficult to maintain the previous start in May, and there is a risk of production reduction due to the decline in orders. And on the whole, more processing enterprises have varying degrees of concern about the new orders in June, so from the perspective of marginal changes, the raw material procurement enthusiasm of original aluminum processing enterprises has declined, which is more obviously reflected in the demand for aluminum rods. After the festival, there has been a sharp decline in feedback orders from some northern aluminum bar enterprises. In terms of raw aluminum consumption of recycled aluminum, due to the great increase in the shipping willingness of waste aluminum holders, the increase in the supply of remelted bars in the market, and the decline in aluminum bar processing fees, aluminum water bar factories have gradually begun to add waste aluminum, and the replacement of raw aluminum for waste aluminum in aluminum bars has reached an inflection point. It is expected that the current orders of aluminum processing enterprises are still relatively sufficient to continue to maintain stability next week, and some processing enterprises may reduce production due to insufficient orders at the end of the month.

Specific product types:

Primary aluminum alloy: the primary aluminum alloy faucet alloy held steady at 55.0% this week. Due to the soaring processing fees of aluminum bars, the conversion of primary alloy to aluminum bars did not continue to increase. A356.2 monthly orders are more stable this week after receiving orders at the end of April. Although the aluminum bar processing fee is lower than that before May 1, considering that the starting condition of the downstream profile of the aluminum bar is better than that of the aluminum wheel downstream of the primary alloy, it is expected that the output of the primary alloy will not increase in the short term, and the operating rate is stable.

Aluminum plate and strip: the operating rate of large plate and strip enterprises is basically stable this week. According to SMM, leading board enterprises during the May 1 period basically do not have holiday as usual production, as far as orders are concerned, the situation is not much different from last week, construction and medical care is still a hot plate, domestic trade orders are relatively stable, but manufacturers worry about foreign trade orders more and more obvious, although the early adjustment of the product structure to make up for part of the foreign trade gap, but the growth rate of domestic trade orders is insufficient, the backlog of orders in individual large enterprises is obviously less than last year. In addition, large enterprises with sufficient individual orders are more active in purchasing raw materials and have a strong sense of hoarding in the near future. at the same time, the pressure of finished product inventory is reduced to a certain extent compared with the previous period, because their own middlemen customers are more willing to take goods. For next week, big companies are not optimistic that future orders remain uncertain.

Aluminum cable: the operating rate of large cable enterprises this week is the same as last week, with little fluctuation. At present, the related orders of aluminum wires in the hands of large domestic cable enterprises are still mainly years ago, and there are not many new orders after the year, and the order schedule can basically be extended to the second half of the year. In terms of export, enterprise feedback still did not improve significantly, but because the cable enterprises are mainly based on the national network south network orders, the domestic market is the main, so the decline of export orders has a limited impact on the overall order and production. At present, large cable companies have reported that orders were stable in the second quarter as a whole, and there was no significant decline in April compared with the same period last year. In addition, on the aluminum rod enterprise feedback, May Day cable enterprises after the replenishment action, buying goods is relatively positive.

Aluminum profile: the ratio of profile enterprises is basically the same this week. The overall start-up of construction profile enterprises is better than that of industrial profiles, the opening rate of all kinds of profile enterprises is also maintained at a high level, and the degree of recovery of export orders is extremely limited. Orders for construction profiles are based on construction demand, orders for industrial profiles are relatively scattered, transportation, machinery and equipment, consumer goods and electricity are in demand, most of the orders of large enterprises can last until June, but there is a lot of uncertainty. Inventory, aluminum bar processing fees have begun to decline slightly, before the replenishment speed of raw materials enterprises slowed down; some enterprises inventory backlog of finished products still exist, strict requirements for the speed of customer pick-up. In the short term, the overall start-up of profile enterprises will remain high.

Aluminum foil: the operating rate of aluminum foil in the first week of April was 85.3%, up 1.7 percentage points from the week before May Day. From a product point of view, air conditioning foil is still depressed compared with the same period last year, mainly due to weak terminal demand, domestic air conditioning manufacturers scheduled production in May decreased by about 1/5 compared with the same period last year, while foreign demand was sluggish, so the demand for air conditioning foil decreased significantly compared with the same period last year. The processing fee is as low as 4500 yuan / ton, and the low profit of processing can not drive enterprises to increase production. The demand for fast-consumer foil products such as food foil and packaging foil at home and abroad has picked up month-on-month, with research enterprises saying that orders for fast-elimination foil are better than the same period last year; electronic foil production has rebounded slightly from the same period last year, mainly due to downstream stock preparation considerations, orders have increased compared with last week, and some research enterprises are worried that the weak demand for electronic foil terminals will delay feedback to upstream processing enterprises. Considering that air conditioning is about to enter the peak season, the downstream demand for air conditioning foil will be increased, contributing to the overall aluminum foil production increment. It is expected that the operating rate of aluminum foil enterprises will increase slightly next week compared with this week.

Recycled aluminum alloy: the start of recycled aluminum enterprises increased slightly by 1.9 percentage points this week, mainly due to the recovery of maintenance capacity before the May Day holiday. As the center of gravity of aluminum prices continues to move up, although the liquidity of domestic waste aluminum supply has increased, but the price has not yet been relaxed, which makes it more contradictory with the overall weakness of downstream consumption after entering May, resulting in an increase in demand for relatively cheap imported aluminum alloy ingots in the recycled aluminum industry. However, in view of the long delivery period for the production and transportation of imported aluminum alloy ingots, it is expected that in May, especially in the first half of the month, the amount of imported aluminum alloy will be relatively small. Under the tight supply, the ADC12 price of imported aluminum alloy ingots has moved up. However, the impact of imported aluminum ingots increased in the second half of the month, which may occupy the production capacity of some recycled aluminum enterprises. In addition, due to the increase in the liquidity of waste aluminum for two consecutive weeks, the current supply of remelted bars (non-standard) has greatly increased, and downstream demand has also begun to show fatigue. Some northern aluminum bar factories have said that orders have dropped significantly after the festival, which has gradually reduced the processing fees of aluminum bars. In the aspect of aluminum bars, there is an inflection point in the replacement of waste aluminum, the proportion of heavy melting bars in the use of waste aluminum has greatly increased, and the proportion of waste aluminum in aluminum bars has also increased slightly. It is expected that with the continuous increase in the liquidity of waste aluminum, there will be a significant decline in the consumption of aluminum bars for raw aluminum.

(SMM Aluminum Group)