Year-End Construction Stagnation and Delivery Delays Cause December Aluminum Wire and Cable Operating Rate to Pull Back as Expected [SMM Analysis]

January 7, 2025

According to SMM statistics, the comprehensive operating rate of the domestic aluminum wire and cable industry in December 2024 was 51.01%, down 8.95% MoM and up 3.28% YoY from December 2023. Specifically, the operating rate of large enterprises in October recorded a MoM decrease of 10.92% to 59.2%, while medium-sized enterprises saw a MoM decline of 6.86% to 49.45%, and small enterprises dropped 13.56% MoM to 27.12%.

In December, as winter set in, construction in north China stalled due to low temperatures, and end-user pickup slowed, leading to a sharp decline in the operating conditions of aluminum wire and cable enterprises and a significant drop in shipments, showing an unexpected downturn. By enterprise scale, leading enterprises reduced production mainly for equipment maintenance as the delivery of State Grid orders came to an end. Small and medium-sized enterprises also showed weak operating rates due to the off-season at year-end.

In terms of specific orders, the delivery of ultra-high voltage orders has temporarily concluded, and most orders delivered in December were scattered ones such as distribution network and inventory orders, with no urgent delivery schedule. For aluminum alloy cables, PV module production weakened MoM in December, and related new energy grid connection orders showed relatively weak performance. Regarding enamelled wire, demand for aluminum enamelled wire in south China was strong, with a "rush for export" trend. Currently, operating performance remains robust, making it one of the better-performing segments. According to State Grid bidding data, the pickup volume for Q1 2025 is expected to decline by more than 20% YoY, and enterprises have reported concerns about Q1 deliveries.

According to customs data, aluminum wire and cable exports in November 2024 totaled 16,800 mt, continuing the rebound trend with an 18.31% MoM increase from October. However, overall export performance was weaker than the same period last year, with a YoY decline of 8.91% compared to November 2023. In October, the total export value of aluminum wire and cable reached $50.86 million, up 22.53% MoM. From January to November, the total export volume of domestic aluminum wire and cable was 168,600 mt, down 3.49% YoY compared to 174,600 mt in the same period of 2023.

SMM Brief Analysis: According to data from the National Energy Administration, investment in power grid projects from January to November 2024 reached 529 billion yuan, up 18.7% YoY from 445.8 billion yuan in the same period of 2023. Publicly available information shows that three AC lines were officially put into operation this year, three DC lines were fully completed, and during the "14th Five-Year Plan" period, three more lines are under construction, with four lines awaiting approval and 14 ultra-high voltage projects in reserve. Over the next five years, the proportion of investment in ultra-high voltage projects may further increase. However, based on the number and value of State Grid tenders, as of the end of 2024, both fell short of early-year expectations. This may impact the delivery schedule for 2025, and in the short term, the operating performance of the aluminum wire and cable industry is expected to decline next year.