Aluminum Plate/Sheet, Strip and Foil Market Gradually Recovers After the Holiday; Seasonal Rebound Expected Amid Structural Divergence [SMM Analysis]

SMM February 16 News

This week, the operating rate of leading aluminum plate/sheet and strip enterprises recorded 64.6%, a slight increase of 1.6 percentage points compared to pre-holiday levels. After the Chinese New Year holiday, the resumption of work at aluminum plate/sheet and strip enterprises has been relatively slow. Although transactions are gradually recovering, inquiries and orders remain below expectations. On the one hand, this is due to the ongoing off-season in the consumer market, resulting in weak demand. On the other hand, downstream end-user clients had stockpiled sufficiently before the holiday, leading to low restocking willingness. Except for high-value-added products such as automotive and aerospace plates, which were less affected by the holiday and maintained relatively stable orders, demand for other products from downstream sectors still awaits recovery. Next week, with the Lantern Festival marking the end of the Chinese New Year holiday and the approach of March, the traditional peak season, the operating rate is expected to rise slowly.

This week, the operating rate of leading aluminum foil enterprises increased by 1.3 percentage points to 72.7%. As of now, most downstream clients of aluminum foil plants have resumed production, leading to a gradual increase in orders for aluminum foil enterprises and driving the operating rate of some leading enterprises higher. By product category, the recovery of orders for air-conditioner foil, which is highly seasonal, appears optimistic due to the approaching peak season and the stimulus from national subsidy policies on the home appliance consumer market. However, products such as food packaging foil and battery foil continue to face intense competition due to surplus capacity from new production lines in recent years. Additionally, some aluminum foil products are about to enter new annual overseas market long-term price negotiations, which may impact the subsequent operating rates of aluminum foil enterprises. Meanwhile, the actual stimulating effect of national subsidy policies on the end-user automotive and home appliance consumer markets should not be overlooked and requires close attention. Looking ahead, as the traditional peak season in March officially begins, the order volume and operating rate of leading aluminum foil enterprises are expected to continue rising.

In summary, although the post-Chinese New Year recovery in the aluminum plate/sheet, strip, and foil market has fallen short of expectations, with the approach of March's traditional peak season, the operating rates in both major sectors are expected to continue their gradual upward trend. However, attention should be paid to the divergent trends in different sub-sectors caused by surplus capacity, overseas price negotiations, and varying policy effects.

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