Chinese New Year Effect Combined with Weak Demand: How Was the Production of Domestic Primary Aluminum Billets at the Beginning of the Year? [SMM Analysis]

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SMM, February 16:

Comprehensive Production Cuts! Affected by multiple factors during the Chinese New Year holiday, domestic primary aluminum billet production in January 2025 plummeted by over 100,000 mt, with the decline exceeding expectations. January and February are traditionally the off-season for the primary aluminum billet industry. During the Chinese New Year holiday, factors such as employees returning home, downstream shutdowns, and annual equipment maintenance have led to widespread production cuts or partial shutdowns among aluminum billet enterprises, which was anticipated. However, due to strong aluminum prices during the month and various influencing factors, downstream holidays started slightly earlier this year, extending the vacuum period for aluminum billet demand. To avoid excessive in-plant inventory causing financial and sales pressure, aluminum billet enterprises showed a slightly lower willingness to produce during the holiday. The daily average production of domestic primary aluminum billets decreased by 4,000 mt MoM to around 43,000 mt/day.

According to SMM's latest monthly survey data, the number of sample enterprises in SMM's primary aluminum billet monthly survey currently totals 169, with a total capacity of 31.205 million mt, unchanged from the previous month. In January 2025 (31 days), the total national production of primary aluminum billets was 1.342 million mt, down 123,000 mt MoM from December 2024 (31 days), a decrease of 8.40%; YoY, it increased by 49,000 mt, a growth of 3.9%. The domestic operating rate of primary aluminum billets in January was 51.6%, down 4.8% MoM. By region, the top five provinces for aluminum billet production—Shandong, Xinjiang, Yunnan, Inner Mongolia, and Guangxi—maintained relatively stable production, with production declines lower than the national average. Factors such as significant Chinese New Year discounts offered by upstream producers in provinces like Guangxi and Yunnan played a key role. Provinces with higher production cuts were mainly concentrated in north China, with Qinghai, Gansu, and Ningxia experiencing production declines of over 20% MoM, while Shaanxi and Henan saw declines of over 10% MoM. Among southern provinces, Guizhou and Sichuan recorded production declines of over 15% MoM. Overall, the production cuts in southern regions were slightly less severe than in northern regions. Additionally, due to higher production during the Chinese New Year in major aluminum billet supply regions for the south China market—Guangxi, Yunnan, and Xinjiang—post-holiday in-plant inventories remained high, leading to rapid inventory buildup in Foshan. Meanwhile, aluminum billet consumption regions in east China have shown varying degrees of destocking.

Overall, early February was still within the Chinese New Year break, and most profile enterprises resumed operations only around the Lantern Festival. Aluminum billet demand in the first half of February was at its lowest point of the year. Although downstream profile demand gradually recovered in mid-February, overall demand performance for the month remained less than ideal. Additionally, while some billet plants increased production after the holiday, the reduced number of operating days in February compressed effective production time. Therefore, SMM expects domestic primary aluminum billet production in February to decline further by 1.86% MoM to 1.317 million mt.

Data Source: SMM Click on the SMM Industry Database for More Information