[SMM Weekly Survey] Aluminum downstream order structure to the bright spot plate transfer of building materials, pharmaceutical consumption slightly increased

SMM, April 30, 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 aluminum downstream leading enterprises started a small decline, the overall stability-based. Consumer bright spots continue to focus on the construction, pharmaceutical plate, and as enterprises independently transfer the product structure to the bright spot plate, bright spot plate consumption still rose slightly, in addition, the national network bidding and 5G base station aluminum demand also appeared to rise. Specifically, aluminum plate and strip, aluminum foil and primary alloy have obvious product structure adjustment, aluminum plate and strip mainly turn to the surge of middlemen's demand for construction and medical equipment related orders, aluminum foil turns to medicine foil, food foil exuberant demand, primary alloy directly to the production of the current strong demand of 6063 aluminum bars. The poor performance is mainly in the traditional recycled casting alloy, because its terminal is too concentrated in automobile consumption, and the price of raw aluminum and waste aluminum is shrinking, the overall demand and the proportion of raw aluminum consumption in recycled aluminum industry are both weakening. In other areas of recycled consumption, due to the relatively strong terminal demand in the aluminum bar and aluminum plate industry, the original aluminum substitute for waste aluminum still exists, and the proportion of aluminum consumption is still high. In the later stage, we need to pay attention to the increase in the arrival of aluminum bars, the reduction of processing fees makes the original aluminum instead of waste aluminum weakened, the proportion of aluminum consumption weakens and the sustainability of hoarding by middlemen and dealers, and there is still a downward risk of starting work downstream in May.

Specific product types:

Primary aluminum alloy: the primary aluminum alloy faucet alloy fell to 55.0% this week, down 6.9 percentage points from last week. The main reason for the decline in the operating rate is that some manufacturers with both aluminum bars and primary alloy products have reduced alloy output due to the sharp rise in aluminum bar processing fees and transferred part of the production capacity of aluminum bars, and the supply gap has been supplemented by increasing production by other plants. As a result, the increase or decrease of primary alloy operation rate varies, but on the whole, the reduction is greater than the increment, and the overall start-up shows a downward trend.

Aluminum plate and strip: the operating rate of large plate and strip enterprises this week is slightly higher than that of last week. Although enterprises have reported that foreign trade orders affected by the foreign epidemic have not improved significantly, but at present, they have more actively opened up the domestic market and actively adjusted the product structure to adapt to the domestic market. In terms of domestic trade orders, most of the large board and strip enterprises in Henan this week reported that their orders had improved compared with the previous period, especially in the construction and medical equipment industry, and the order growth in the construction and medical equipment industry was the most obvious, and the automobile and packaging were still weak. In addition, downstream said that due to the recent rise in aluminum prices, some middlemen or dealers began to show signs of hoarding, placing orders very actively, resulting in a rapid increase in their own orders, but also expressed concern that the surge in orders may be a pre-order phenomenon, follow-up orders may not be sustainable.

Aluminum cable: the operating rate of large cable enterprises this week is slightly higher than that of last week. At present, the general operating rate of large cable enterprises in Jiangsu and Zhejiang is maintained at 70%-80%, but the feedback production of enterprises is still dominated by orders made before a year ago. At present, orders for related engineering lines have increased. Although the national network has begun to release new bidding orders, the relevant UHV orders have not yet been reflected, mainly some orders for distribution lines, and the overall order of magnitude is relatively small. Relatively speaking, the performance of aluminum cables is lower than that of copper cables. Enterprises are basically according to the original plan of production, aluminum cable orders are expected to be scheduled to the second half of last year. At present, according to expectations, the overall production and new orders are expected to be relatively stable in the second quarter, and there may be bright spots in the second half of the year.

Aluminum profile: the operating rate of profile enterprises has not changed much this week. Large building materials enterprises are basically close to full production, the overall opening rate of large industrial materials enterprises is slightly higher than 80%, and the impact of the epidemic on export-related orders continues. Orders for construction profiles in real estate and infrastructure-related fields are abundant, and overall demand can last at least until the middle and late May, and some enterprises with strong orders can receive orders until the end of June; the new growth point of domestic demand for industrial profiles lies in the communication base station part of 5G orders, in addition, car-related demand is gradually recovering, and domestic demand related to photovoltaic and rail transit is also increasing. The overall start of construction of profile enterprises above the scale in May will continue to remain high.

Aluminum foil: aluminum foil leading enterprises have increased slightly this week, with the production capacity of leading enterprises in overseas markets transferred to China, with the diversity of raw material inventory and the low cost of large-scale production to occupy more domestic markets to supplement the lack of foreign demand. Sub-products: air-conditioning foil production cycle is short, market transfer cost is low, time-consuming. Especially in the case of low processing cost of air-conditioning foil, it is more necessary to increase the cost to share the cost, so the leading enterprises of air-conditioning foil are basically full production, the production cycle of automobile foil is long, the customization of brazing foil is diverse, and it is not easy to transfer the market in a short time. Due to the high technical requirements of electronic foil, small factories can not participate, the domestic market has been allocated by large factories, the lack of foreign market demand can only reduce production; Household foil and food packaging foil in foreign demand is good, but the export is increasing; medicinal foil is still good. At present, the large aluminum foil factory maintains normal production, but the small factory market is squeezed.

Recycled aluminum alloy: the operating rate of recycled aluminum enterprises this week is 6.3 percentage points lower than that of the previous month. The main reason for the reduction in production is due to the small number of new orders, some recycled aluminum enterprises began to reduce production before May 1. And within the week, as the aluminum price continues to rise, the price of waste aluminum rises, and the current weak demand makes the traditional recycled aluminum enterprises have a low acceptance of high-priced waste aluminum, which also makes the proportion of traditional recycled aluminum enterprises continue to decrease. The follow-up still needs to wait for the overseas car factory to resume work for the demand drive, the demand in early May is difficult to improve. In the aspect of aluminum bar, because the processing fee of aluminum bar is still relatively high, the substitution of primary aluminum for waste aluminum still exists, and the aluminum water bar still does not add waste aluminum. In terms of remelting rods, the current processing fees can still continue to use A00 aluminum remelting production, but due to the current high aluminum prices, scrap aluminum holders due to the subsequent freight rise led to a significant narrowing of the previous inventory losses this week greatly increased willingness to ship, the subsequent melting bar primary aluminum consumption will be reduced.

(Shanghai Nonferrous Network Aluminum Group)