Post-Holiday Aluminum Rod Market Transactions Slightly Rebound, Wire and Cable Industry Still Awaits Order Momentum [SMM Analysis]

February 15, 2025

This week, the domestic aluminum rod market continued its stable trend. SMM A00 aluminum spot prices were reported at 20,600 yuan/mt, up 130 yuan/mt from the previous week, with the futures market showing a gradual upward trend. Notably, under the dual effects of an extended liquid aluminum digestion cycle and pre-holiday finished product inventory accumulation, the current market remains in a supply surplus. Although end-use consumption recovery remains weak, top-tier aluminum rod enterprises performed well in shipments, benefiting from post-holiday restocking demand by traders. Regarding ex-factory processing fees, the average ex-factory price for 1A60 ordinary aluminum rods in Shandong was recorded at 300 yuan/mt; in Henan, the processing fee for 1A60 aluminum rods was reported at 350 yuan/mt; and in Inner Mongolia, the ex-factory processing fee for 1A60 aluminum rods was 100 yuan/mt. As for the three major trading regions, the average delivery-to-factory processing fee for ordinary rods in South China was recorded at 550 yuan/mt, while in Hebei, the average delivery-to-factory processing fee for 1A60 aluminum rods was 300 yuan/mt, and in Jiangsu, it was 400 yuan/mt, remaining basically flat compared to pre-holiday quotes. In the short term, the market is in a phase of "strong expectations versus weak reality." Both downstream manufacturers and traders have restocking needs after the holiday, but the sustainability of this demand is constrained by the efficiency of order transmission from end-users, with end-use consumption still performing relatively weakly. Therefore, SMM believes that in the short term, there is still a lack of substantial momentum for aluminum rod processing fee increases. Moving forward, attention should focus on the State Grid's cargo pick-up pace, the implementation trends of new energy grid connections, and the impact of the home appliance trade-in policy on consumption.

This week, the operating rate of leading domestic aluminum wire and cable enterprises was recorded at 51%, up 6% from the week before the holiday. Currently, leading aluminum wire and cable enterprises have resumed operations after the holiday, while the resumption process for small and medium-sized enterprises is slower than that of top-tier enterprises. Due to the relatively low urgency of post-holiday delivery orders this year, operating conditions have not yet fully recovered. Recently, the first batch of transmission and transformation projects and the first batch of ultra-high voltage (UHV) tenders are being carried out successively, with a total of 230,000 mt of ground wire and conductor orders, which are expected to be opened for bidding on February 17. SMM believes that in the short term, the aluminum wire and cable industry is still in the recovery phase, with operating performance fluctuating downward. However, as orders for transmission and transformation projects and UHV projects are implemented, they will inject a "booster" into the industry's operational recovery.