January Aluminum Wire and Cable Production Remains at Low Levels During Chinese New Year; Orders Await Recovery with Spring Demand Surge [SMM Analysis]

February 9, 2025—According to SMM statistics, the comprehensive operating rate of China's aluminum wire and cable industry in January 2025 was 40.85%, down 10.16% MoM and 8.34% YoY compared to January 2024. The main reason was that the Chinese New Year holiday in 2024 occurred later, leading to relatively delayed shutdowns. The operating rate of large enterprises in January recorded a MoM decline of 11.64% to 47.56%, medium-sized enterprises fell 10.14% MoM to 39.31%, and small enterprises dropped 11.02% MoM to 16.10%. In Q1 2025, order delivery was not urgent. During the first half of January, most enterprises maintained a normal production pace with steady shipments. However, as the month progressed into the latter half, companies gradually transitioned into the holiday phase, focusing on production cuts and equipment maintenance. From the perspective of holiday arrangements, most leading enterprises followed the national holiday schedule, resuming work around the eighth to tenth day of the lunar new year. In contrast, small and medium-sized enterprises started their holidays earlier and resumed work more slowly, though some manufacturers resumed early due to end-of-month order demands. Regarding raw material inventory, as there were not many urgent post-holiday orders, raw material stocking remained at normal levels. Some leading enterprises increased their finished product inventories to facilitate concentrated deliveries after the holiday. In terms of specific orders, orders from the State Grid followed a normal delivery schedule in the first half of January, while the first material bidding announcement for ultra-high voltage (UHV) projects was issued at year-end. There were no significant new orders in the industry. For aluminum alloy cables, PV grid connection performance at year-end was average, and related enterprise orders were moderate. As for enamelled wire, despite strong performance in December, companies shifted their focus to cash flow recovery at year-end, leading to weaker performance in January. Enterprises reported that Q1 delivery volumes are expected to be lower than last year, with concerns about subsequent orders. According to customs data, China's aluminum wire and cable exports in December 2024 reached 26,700 mt, marking a significant rebound at year-end. Export volumes rose 59% MoM compared to November and increased 57% YoY compared to November 2023. From January to December, total aluminum wire and cable exports amounted to 195,300 mt, up 1.83% YoY from 191,700 mt in 2023. The aluminum wire and cable industry in 2024 experienced fluctuations. While export volumes were strong at the beginning of the year, they declined as domestic operating capacity remained at high levels. However, exports rebounded at year-end, achieving a YoY growth of 1.83%. Currently, overseas construction demand continues to grow, and domestic production capacity maintains a quality advantage. Enterprises expect aluminum wire and cable exports to remain relatively high in January-February, with 2025 export volumes potentially exceeding 200,000 mt. SMM Analysis: According to data from the National Energy Administration, total investment in power grid projects in 2024 reached 608.3 billion yuan, up 15.2% YoY from 527.7 billion yuan in 2023. In 2025, the State Grid Corporation of China is expected to increase investment, potentially exceeding 650 billion yuan for the first time, with a focus on UHV projects. In 2024, China saw three UHV projects start construction and three go into operation, with relatively slow bidding and construction progress. In 2025, the bidding process is expected to accelerate. The State Grid plans to conduct six rounds of UHV line material bidding throughout 2025, one more than in 2024, though specific bidding amounts and quantities remain unclear. SMM believes that the "order saturation period" in the aluminum wire and cable industry has temporarily passed. Although production schedules are still being arranged, the industry needs further implementation of power grid construction-related orders to ensure sustainability. In the short term, the operating rate of aluminum wire and cable is expected to recover seasonally but may underperform compared to the same period last year.