November Aluminum Wire and Cable Operating Rate Unexpectedly Rose by 1.27% MoM [SMM Analysis]

According to the SMM survey, the comprehensive operating rate of the domestic aluminum wire and cable industry in November 2024 was 59.96%, up 1.27% MoM and up 10.36% YoY compared to November 2023. Specifically, the operating rate of large enterprises in October recorded a MoM increase of 0.86% to 70.11%, medium-sized enterprises rose 0.97% MoM to 56.32%, and small enterprises increased by 5.08 MoM to 40.68%.

In November, the operating conditions of aluminum wire and cable enterprises reversed, as production did not weaken due to the impact of temperature on power grid construction. Instead, the saturated orders this year and resilient demand for distribution network order pickups supported the operating rate, which slightly rebounded. Additionally, aluminum wire and cable enterprises aimed to complete delivery tasks by year-end.

From the perspective of enterprises of different scales, the operating rate of leading enterprises continued to rise after a slight correction, driven by a significant backlog of orders to be delivered by year-end, keeping production at a high level. For small and medium-sized enterprises, the timeliness of order delivery, coupled with a recovery in order profitability, significantly improved production sentiment, driving a gradual increase in operating rates.

In terms of specific orders, although this year's ultra-high voltage (UHV) orders have temporarily concluded, pending production orders remain well-aligned, mainly focusing on provincial network distribution network and material-related orders.

In other aspects, the production schedule for PV modules in December has continued to weaken, and new energy grid connection consumption orders remain uncertain. However, a year-end sprint phase cannot be ruled out, so a cautious attitude is maintained toward new energy grid connection orders.

Regarding new orders, the State Grid's material and distribution network orders have concentrated on releasing winning bid results, providing support for the aluminum wire and cable industry next year. Additionally, most orders to be delivered are concentrated in Q2, while the State Grid's pickup volume in Q1 is not optimistic.

According to customs data, aluminum wire and cable exports in October 2024 reached 14,300 mt, achieving a rebound in export volume, up 52.7% MoM from August and up 13.64% YoY. The total export value of aluminum wire and cable in October was $41.5 million, up 47.89% MoM. Among these, the export volume of steel-core aluminum stranded wire and similar products was 8,480 mt, up 82% MoM, while the export volume of aluminum stranded wire and similar products reached 5,831 mt, up 23% MoM.

SMM Brief Analysis: According to data from the National Energy Administration, from January to October 2024, investment in power grid projects totaled 450.2 billion yuan, compared to 373.1 billion yuan in the same period of 2023, up 20.7% YoY. Currently, the emphasis on UHV projects remains high. According to the State Grid Corporation of China, 37 UHV projects have been completed, with a total of 49 UHV projects under construction or operation.

Despite recent internal and external challenges in the domestic aluminum processing industry, the aluminum wire and cable industry has not been affected by the tax rebate policy. Coupled with policy support to boost domestic demand, the outlook for the aluminum wire and cable industry remains optimistic. While the operating rate in November remained high, aluminum wire and cable enterprises may complete deliveries in December, shifting their focus to payment collection, which could lead to a pullback in the industry's operating rate.