SMM data showed that the PMI for China’s aluminium processing sectors stood at 42.9% in January 2024, remaining in the contraction territory. As CNY is drawing near, companies gradually reduced production and took CNY holidays. Some small and medium-sized companies, especially those located in north China, have shut down for CNY in the middle of the month, dragging down the production index to 29.3%. Decline in production and orders hurt the purchase of raw materials, coupled with the weak terminal consumption and purchasing and producing on demand by most companies, weighing on production and raw material inventory as well as pre-holiday stocking. The finished product inventory index recorded 25.7%, mainly as companies keen on increasing their cash flows at the end of the year, and shipments accelerated due to the upcoming suspension of logistics.

As CNY is drawing near, despite some aluminium processing companies rushing to deliver orders due to upcoming CNY holiday and imminent environmental protection-induced production restrictions, operating rate and order volume remained weak as most aluminium processing companies cut or suspended production for upcoming CNY amid sluggish demand. Overall, affected by off-season and impact of upcoming CNY holiday, PMI of the domestic aluminium processing industry is expected to remain below 50%.