[SMM Analysis] the aluminum strip industry may hit freezing point in July

SMM7, 12 March: according to the first-hand survey data from the end of June to the beginning of July, the starting rate of China's aluminum plate and strip industry in June was 70.32%, down 4 percentage points from the previous month and 5 percentage points higher than the same period last year; the starting rate is expected to be flat or slightly lower in July, and July is likely to be the bottom of the current round of the off-season.

From the point of view of orders, the average scheduling period of stock orders of aluminum strip enterprises at the end of June was about 17 days, which was five days lower than that of the same period last month, except for a small number of enterprises. Domestic trade and export orders of most enterprises have declined to varying degrees. Feedback to July production, if the follow-up orders in July are still not satisfactory, it is likely that production in July will continue to fall by about 5%.

In terms of product classification, it is estimated that it is difficult to segment the strip market in July, and the supporting materials for new energy batteries once attracted a lot of attention in the first half of the year. However, with the decline of the subsidy policy for new energy vehicles and the increasing number of new players, many entrepreneurs have begun to invest in the new energy market; in addition, 5G materials have not yet been put into stock, and suppliers are in the testing stage.

Start-up rate of aluminum plate and strip enterprises

Source: SMM

Inventory: most of the strip enterprises passively improve the inventory of finished products and take the initiative to lower the inventory of raw materials. Finished goods: in the middle of the year, due to the shortage of funds, the aluminum price fell, the enthusiasm of downstream customers was not high, and the strip enterprises more or less had the phenomenon of rising inventory of finished products, which also further dragged down the pace of production; raw materials: the market's expectations of falling aluminum prices in July and August were more consistent, so many enterprises reduced the risk of asset impairment by controlling the stock of raw materials.

On the export side: new export orders have fallen due to trade frictions, but most of the factories that export directly are mainly long orders, which have limited impact; with the devaluation of the RMB, the profits of plate and strip exports may increase, and traders may increase exports in the short term.

(SMM Shanghai Nonferrous net Liang Xuan 021 5166 6922)