August Aluminum Wire Industry Operating Rate Up 0.97% MoM, New Orders from Southern Grid Announced [SMM Analysis]

SMM, Sep 19: According to the SMM survey, the comprehensive operating rate of the domestic aluminum wire and cable industry in August 2024 increased by 0.97% MoM to 60.33%, up 13.23 percentage points YoY. The operating rate of leading enterprises in August recorded an increase of 2.01% MoM to 66.67%, medium-sized enterprises increased by 0.13% MoM to 59.60%, and small enterprises increased by 1.27% MoM to 41.53%.
According to the SMM survey, orders for medium and large aluminum wire enterprises were relatively saturated, and finished product inventories running at low levels. Enterprises indicated that the operating performance would remain relatively stable until October, after which temperatures might affect deliveries. Meanwhile, due to the decline in aluminum prices, the profit margins of orders for small and medium-sized enterprises have somewhat recovered, leading them to take orders and start production, resulting in an increase in finished product inventories to facilitate subsequent shipments. Overall, the operating rate showed a slight upward trend.
In terms of orders, the results of the first batch of framework tender projects for the main grid wires of the Southern Grid were announced in August, with orders totaling 9.029 billion yuan, including aluminum wire, supplementing important industry orders. Additionally, the results of sporadic orders such as provincial material agreements or distribution network agreements were announced one after another, and new orders in the industry continued to rise. In terms of detailed orders, State Grid-related orders remained relatively abundant, and aluminum alloy cables saw an increase due to the slight increase in PV module production. However, the aluminum enamelled wire industry performed poorly in August, with overall shipments in the off-season, but a slight recovery is expected in September.
According to customs data, aluminum wire and cable exports in July 2024 were 13,600 mt, showing a slight recovery, up 5.75% MoM, but down 21.13% YoY. The total export value of aluminum wire and cable in July was $38.52 million, up 5.67% MoM. Among them, the export volume of steel-core aluminum stranded wire and similar products was only 7,998 mt, up 14.54% MoM; while the export volume of aluminum stranded wire and similar products was 5,632 mt, down 4.65% MoM. The total export volume of aluminum wire and cable from January to July 2024 was 114,000 mt, compared to 125,000 mt from January to July 2023, down 8.25% YoY.
SMM Brief Analysis: According to data from the National Energy Administration, the investment in power grid projects completed from January to July was 294.7 billion yuan, up 19.2% YoY. The construction of power grid projects and related grid renovation and upgrades remain a strategic focus this year, providing sustainable support for orders in the aluminum wire industry. Regarding the future operating rate, the operating rate of the aluminum wire industry has been continuously rising since the beginning of this year. UHV power grid projects and PV projects provide continuous demand for aluminum wire. Based on the orders on hand and the sentiment in the raw material market, the operating rate of the aluminum wire industry is expected to maintain a slight upward trend in September.