[SMM Weekly Survey on Aluminum Downstream: Chinese New Year Approaching, Aluminum Downstream Operating Rate Significantly Declines Due to Holiday Impact] This week, the operating rate of leading domestic aluminum downstream processing enterprises continued to decline, down 2.9 percentage points WoW to 57.4%.
SMM, January 16, 2025: This week, the operating rate of leading downstream aluminum processing enterprises in China continued to decline, down 2.9 percentage points WoW to 57.4%. By segment, only the primary aluminum alloy sector maintained its previous operating rate, supported by the liquid aluminum alloying ratio task, while other sectors saw declines, with the rate of decline expanding compared to earlier periods. Among them, the operating rate of aluminum extrusion enterprises dropped significantly, mainly due to the Chinese New Year break cycle, with enterprises in south China gradually halting production and implementing production cuts. The wire and cable sector recorded the second-largest decline, primarily affected by delayed end-user cargo pick-up, year-end enterprise inventory adjustments, and scattered delivery schedules. Aluminum plate/sheet, strip and foil enterprises, having largely fulfilled previously postponed export orders due to environmental protection inspections, also experienced declines in shipments and operating levels due to tightened logistics. Secondary alloy enterprises similarly faced a pre-holiday market slowdown, leading to a drop in operating rates. Overall, affected by the holiday, the decline in downstream aluminum operating rates widened this week. Next week, as processing enterprises enter the concentrated holiday period, operating rates are expected to decline further significantly. According to SMM forecasts, the operating rate of leading downstream aluminum processing enterprises in China is expected to drop sharply by 6.9 percentage points to 50.4% next week. Primary Aluminum Alloy: This week, the operating rate of the primary aluminum alloy sector remained stable at 55%. There were no significant changes in the primary aluminum alloy market during the week. Alloy enterprises continued to maintain their operating rates under the dual pressures of insufficient demand and the liquid aluminum alloying ratio task. Next week, being the last week before the Chinese New Year, some enterprises may slow down production, and the sector's operating rate may decline. Aluminum Plate/Sheet and Strip: This week, the operating rate of leading aluminum plate/sheet and strip enterprises decreased by 2.2 percentage points to 66.6%. The previously postponed export orders of aluminum plate/sheet and strip enterprises were largely fulfilled, and with logistics resources gradually tightening, shipments also declined. As the Chinese New Year approaches, most downstream customers have completed pre-holiday stockpiling, and the operating rate is expected to decline further next week. Aluminum Wire and Cable: This week, the operating rate of leading domestic aluminum wire and cable enterprises recorded 60%, down 3.6% WoW. The decline was mainly due to delayed end-user cargo pick-up, year-end enterprise inventory adjustments, and scattered delivery schedules. According to SMM, wire and cable enterprises in Hebei, Jiangsu, and other regions have gradually entered the holiday state this week, while top-tier enterprises are transitioning to the holiday state next week, with the industry largely entering a rest phase. In terms of sub-sectors, State Grid's cargo pick-up in northern regions has mostly concluded, though some provincial grid orders still show pick-up intentions. Orders for PV and wind power grid connections have mostly paused, and enamelled wire orders also show a weakening trend. In summary, SMM believes that the aluminum wire and cable industry will continue to face seasonal impacts in the short term, with operating rates expected to maintain a downward trend. Aluminum Extrusion: This week, the operating rate of domestic aluminum extrusion enterprises recorded 35.5%, down 9 percentage points WoW, primarily due to the domestic aluminum processing sector gradually entering the Chinese New Year break cycle. In south China, enterprises of all sizes gradually halted production and implemented production cuts during the week, leading to a significant pullback in operating rates, with only a few enterprises continuing production during the holiday and receiving new orders. Sample enterprises in Shandong plan to take a holiday next week, with operating rates already showing weakness this week. In east China, automotive extrusion and PV extrusion production continued, with automotive extrusion orders performing better than the same period last year. Meanwhile, PV module manufacturers, considering Chinese New Year stockpiling, placed fewer orders than expected, providing some support to related enterprises' operating rates. It is expected that after stockpiling is completed next week, extrusion enterprises will also gradually halt production. Overall, domestic aluminum extrusion enterprises are gradually entering the holiday period, with operating rates showing a clear seasonal weakening trend. Aluminum Foil: This week, the operating rate of leading aluminum foil enterprises declined by 1.4 percentage points to 74.0%. Last week, some enterprises resumed normal production following the lifting of environmental protection restrictions and actively fulfilled downstream customers' stockpiling orders. After completing these orders, they began adjusting production plans based on post-holiday orders on hand. Overall market demand remained subdued, and in the week before the Chinese New Year holiday, operating rates are expected to contract further. Secondary Aluminum Alloy: This week, the operating rate of leading secondary aluminum enterprises declined by 1.3 percentage points WoW to 53.1%. With the Chinese New Year approaching, small and medium-sized secondary aluminum plants gradually began taking holidays this week, while sample secondary aluminum enterprises continued production, with only a slight reduction in operating levels. Most manufacturers plan to shut down furnaces and take holidays starting January 20, while sample leading enterprises are mainly scheduled to halt production from January 25-28. Due to recent significant fluctuations in the aluminum market, coupled with cautious sentiment toward the post-holiday market and the consideration of a long holiday period, downstream just-in-time procurement dominated, with pre-holiday stockpiling sentiment remaining moderate. As upstream and downstream enterprises take holidays and logistics gradually halt, transactions are expected to decrease significantly next week, with the operating rate of the secondary aluminum industry expected to decline sharply. 》Click to View the SMM Aluminum Industry Chain Database (SMM Aluminum Team)
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Jan 16, 2025 18:52
