The average operating rate in the aluminum wire and cable sector stood at 54.26% in April, up 1.6% MoM and 6.14% YoY. The operating rate of large enterprises rose by 2.6% MoM to 57.76%, that of medium-sized enterprises rose by 1.36% to 56.88%, and that of small enterprises rose by 1.69% to 30.51%. The overall operating rate rebounded.
By enterprise type, thanks to the accelerated construction of UHV and PV projects, the overall operating rate of medium and large enterprises was relatively stable, and the shipments were in the peak season level; for small enterprises, affected by order profits, the overall operating rate was poor. The companies said that since most of the State Grid pick-up orders were from previous years, the orders were based on last year's aluminum price, and small companies did not engage in hedging operation, bringing risk exposure. The orders suffered losses amid strong wait-and-see sentiment.
In terms of procurement, aluminum prices continued to grow in April. As aluminum prices continued to rise in March, companies were cautious in purchasing. Raw material inventories gradually bottomed out in mid-April, releasing rigid demand. In addition, companies were cautious in purchasing as costs were difficult to control. They were more inclined to engage in hedging operation and purchased on dips to meet normal production needs.
The overall new orders dropped significantly compared to March. Companies mainly consumed backlog orders, and most leading companies scheduled production to the second half of the year. SMM's research showed that the leading aluminum wire and cable companies in Jiangsu, Zhejiang, Sichuan, Chongqing and Xinjiang rushed to complete UHV orders, and production was relatively saturated, driving the market demand for high-conductivity aluminum rods. In addition, pick-up of PV orders increased, and enterprises increased the operating rate to meet the needs of PV grid-connected projects. The demand for 8-series aluminum alloy rods rebounded. However, PV enterprises still produced backlog orders.
According to customs data, aluminum wire and cable exports in March were 14,000 mt, a drop of 6% MoM and 18.7% YoY. However, the export volume in the first quarter grew compared with previous years. The total export volume in the first quarter of 2024 was 56,000 mt , up 16.4% YoY.
SMM analysis: Traditional peak season had passed, but aluminum wire and cable industry was mostly affected by the progress of State Grid projects instead of off season. Although high aluminum price suppressed the operating rate of downstream aluminum wire and cable companies, the operating rate still rose due to the tightening of UHV projects and PV orders pick-up. Based on survey on producers’ orders and production schedules, SMM expects aluminum wire and cable industry operating rate may stabilize in May.
