Aluminum Rod Demand Gradually Recovers MoM, Downstream Aluminum Wire and Cable Operating Rates May Fall in December [SMM Analysis]

Last week, the operating rate of leading domestic aluminum wire enterprises recorded 71.6%, with no significant changes in overall operations. According to feedback from leading enterprises, although this year's ultra-high voltage orders have temporarily concluded, on-hand orders can still sustain production, and the operating rate has not seen a significant decline. In other sectors, recent new energy grid connection orders have been somewhat weak, and PV module production schedules for December are expected to weaken, with subsequent PV grid connection orders unlikely to see significant increases. As the year-end approaches, the operating rate of the aluminum wire and cable industry remains firm. However, considering issues such as order delivery and year-end payments, SMM expects the operating rate of aluminum wire and cable to adjust downward in December.

Aluminum Rod Segment: Last week, aluminum prices have fluctuated downward, and aluminum rod processing fees have not shown significant firmness, with processing fees remaining stable across regions. On November 29, 2024, the ex-factory average processing fee for 1A60 ordinary aluminum rods in Shandong was 350 yuan/mt; in Henan, the average processing fee for 1A60 aluminum rods was 400 yuan/mt; in Inner Mongolia, the ex-factory average processing fee for 1A60 aluminum rods was 250 yuan/mt; in South China, the average processing fee on delivery-to-factory basis for ordinary rods was 550 yuan/mt; in Hebei, the average processing fee on delivery-to-factory basis for 1A60 aluminum rods was 450 yuan/mt; and in Jiangsu, the average processing fee on delivery-to-factory basis for 1A60 aluminum rods was 550 yuan/mt, with actual transactions being relatively low.

According to traders, the market buying sentiment in Jiangsu and Hebei is currently good, with local transportation even being somewhat tight. Aluminum rod manufacturers also indicated that current orders remain optimistic, and based on market transaction conditions, November demand has improved compared to October, with no concerns for market demand in the coming month. Overall, the operating rate of the downstream aluminum wire and cable industry remains high, market buying sentiment is optimistic, and transactions have improved. However, due to ample in-plant inventory, market supply is relatively abundant, and processing fees have not seen significant increases. Considering the sustainability of future market demand and the status of in-plant inventory, processing fees are expected to remain stable. Once in-plant inventory falls to lower levels, processing fees may see a slight rebound, but the rebound is expected to be limited.