SMM Downstream In-Depth Analysis: Structural Recovery in Aluminum Processing PMI for March—Peak Season Demand Fails to Mask Concerns Over High Aluminum Prices and Export Pressures

March 28, 2025 News:

According to data from SMM, China’s aluminum processing industry composite PMI index for March 2025 stood at 61.6%, remaining above the boom-bust line. Driven by the traditional peak season and policy tailwinds, the domestic aluminum processing industry showed structural recovery in March 2025, with PMI for most sub-sectors rebounding above the boom-bust line. However, high fluctuations in aluminum prices, export pressures, and divergent domestic demand continued to constrain the industry’s overall recovery momentum.

The aluminum plate/sheet and foil sectors benefited from seasonal demand in automotive and battery sectors as well as the "old-for-new replacement" policy, with PMI rising significantly month-on-month to 63.3% and 69.3%, respectively. However, India’s anti-dumping duties and weakening overseas orders cast shadows over exports. Construction aluminum profiles saw their new orders index surge above 70% due to concentrated infrastructure project rollouts, while industrial aluminum profiles maintained expansion supported by demand from new energy vehicles (NEVs) and photovoltaics (PV). Nevertheless, small and medium-sized enterprises (SMEs) faced over 50% capacity idling due to technological barriers, exacerbating industry polarization. The aluminum cable sector, driven by front-loaded ultra-high-voltage (UHV) orders, saw its production index soar to 73.05%, with full recovery in operating rates expected as grid delivery phases begin. Benefiting from increased effective production days and seasonal demand, the recycled aluminum PMI surged 27.7 percentage points to 70.4%, though high aluminum prices suppressed downstream procurement, exposing risks of weak recovery in primary aluminum alloys and inventory buildup in recycled aluminum.

While April’s new PV policies and peak grid delivery seasons may sustain growth in some sectors, aluminum prices exceeding 21,000 yuan/ton could further dampen purchasing sentiment. Coupled with export pressures and overcapacity among SMEs, the industry’s overall upside potential may be constrained.

By product category:

Aluminum Plate/Sheet:

The March PMI for the aluminum plate/sheet sector was 63.3%, up 8.5 percentage points month-on-month (MoM), staying above the boom-bust line. At the start of the traditional peak season, demand from automotive and battery sectors seasonally recovered, further boosted by the "old-for-new replacement" policy from the Two Sessions, driving an upward trend. However, weak consumption recovery momentum and declining exports limited growth. The new export orders index for March was 64.2%, reflecting gradual recovery in overseas orders from their year-start lows. Meanwhile, volatile aluminum prices intensified downstream caution, with procurement limited to rigid demand. Prices exceeding 21,000 yuan/ton could further suppress purchasing enthusiasm. Despite concerns over inventory buildup and a "weak peak season" in terminal demand, policy expectations and dual domestic/overseas demand drivers are expected to keep the April PMI above the boom-bust line.

Aluminum Foil:

The March PMI for the aluminum foil sector was 69.3%, up 3.7 percentage points MoM, remaining above the boom-bust line. The new orders index hit 85.1% as demand for air-conditioning foil and battery foil steadily recovered during the peak season, allowing leading enterprises to stabilize operations with ample orders. Although aluminum price volatility dampened downstream procurement, production remained resilient, supported by rebounding overseas orders. Macro-level policies favoring home appliances and NEV "old-for-new replacement" boosted segments like brazing foil and battery foil. However, India’s anti-dumping duties on Chinese aluminum foil may pressure exports, adding uncertainty. Short-term supply-demand dynamics remain stable, with leading enterprises demonstrating strong production resilience. The April PMI is expected to stay above the boom-bust line.

Construction Aluminum Profiles:

The March PMI for construction aluminum profiles rebounded to 57.52%, staying above the boom-bust line. Per SMM research, December-February marked the traditional off-season, but March saw the production index rise to 58.53% as demand recovered. Aluminum prices remained high, prompting firms to maintain minimal safety stock, with the raw material procurement index at 60.24% and inventory index dropping to 44.15%. Market structure shifted toward government-led projects (e.g., high-speed rail/airports, industrial parks), lifting the new orders index to 70.84%, while traditional civilian profile business shrank. Export performance diverged: despite tariff and price challenges, firms maintained sporadic exports via adjusted pricing mechanisms, with the export orders index at 49.08% (contraction zone). As April’s peak season approaches, further PMI upside is anticipated.

Industrial Aluminum Profiles:

The March PMI for industrial aluminum profiles was 62.22%, staying above the boom-bust line. Sub-indices showed production and new orders at 64.33% and 79.64%, respectively, driven by steady output growth. However, some building material firms with partial exposure to industrial profiles began strategic retrenchment by late March. These firms, with less than 30% industrial profile capacity, reported high technical barriers in auto parts manufacturing, leading to concentration among top players. While leading firms enjoy saturated orders from NEV supply chains, SMEs with weak R&D face over 50% capacity idling. In PV profiles, demand for brackets and frames stayed strong. Despite low processing fees, component manufacturers’ stockpiling under new PV feed-in tariff policies kept leading firms at full production. High aluminum prices prompted need-based procurement, with the raw material procurement index at 66.58% (expansion zone). Notably, while aluminum prices remain elevated, falling processing fees and intensified competition pressure firms to destock and cut costs. Most adopt "produce-to-order" strategies with minimal safety stock, keeping the raw material inventory index at 41.41%. For finished goods, leading PV firms built preemptive inventory for mainstream products, lifting the index to 56.33%. With auto sector capacity recovery and stable PV demand, industrial profile PMI is expected to stay above the boom-bust line in April.

Aluminum Cable:

The March PMI for aluminum cables was 59%, up 6.6% MoM, signaling expansion. As grid delivery phases approached in April, UHV and power transmission orders accelerated, driving orderly post-holiday resumption and higher capacity utilization. The production index surged 26.05% MoM to 73.05%. New orders from grid projects like UHV transmission boosted the new orders index to 25.59%. Raw material procurement rose (54.28%) due to restocking needs, while finished goods inventory increased (60.56%) ahead of deliveries. With April’s grid delivery peak, sector-wide operating rates are expected to recover fully, keeping PMI above the boom-bust line.

Primary Aluminum Alloys:

The March PMI for primary aluminum alloys was 57.8%, down 2.2 percentage points MoM, indicating weak recovery. Leading firms saw gradual output increases (production index: 68.8%), but momentum faded weekly. Supply normalized post-Lunar New Year, yet ample circulating supply, high factory/raw material inventories limited expansion. Weak new orders and high aluminum prices heightened downstream caution, with spot trading muted. Production growth slowed amid supply-demand imbalances, reflecting uncertain price trends. SMM expects April PMI to stay above the boom-bust line but with limited upside.

Recycled Aluminum:

In March, the PMI for the recycled aluminum industry surged by 27.7 percentage points month-on-month (MoM) to 70.4%, rapidly crossing above the boom-bust line. On the production side, as the impact of the Lunar New Year holiday subsided, effective production days increased, and seasonal demand rebounded, recycled aluminum enterprises generally saw order volumes recover, driving higher operating rates across the sector. However, it is noteworthy that due to order front-loading and ongoing destocking at the terminal end, the anticipated "Golden March" peak season failed to materialize, with actual downstream orders contracting significantly year-on-year. Regarding inventory, recycled aluminum plants faced mounting pressure from finished product inventory buildup due to supply-demand imbalances, while raw material stockpiles remained low as high prices constrained procurement. Looking ahead to April, if terminal demand fails to rebound as expected, the industry PMI may fall below the boom-bust line again.

Summary:

The composite PMI for China’s aluminum processing industry rebounded to 61.6% in March 2025, entering expansion territory as traditional peak season effects and policy dividends converged. Most sub-sectors recovered above the boom-bust line. Aluminum plate/sheet (63.3%) and foil (69.3%) rode seasonal automotive/battery demand and replacement policies, though India’s anti-dumping duties and weak overseas orders weighed on exports. Construction profiles’ new orders exceeded 70%, while industrial profiles expanded on NEV/PV demand, yet SME technical bottlenecks caused over 50% capacity idling, highlighting polarization. Aluminum cables led with a 73.05% production index, driven by UHV orders and grid deliveries. Recycled aluminum PMI skyrocketed 27.7 points to 70.4%, but high prices stifled procurement, exposing weak recovery in primary alloys and inventory risks. Looking ahead, while April’s PV policies and grid peak may sustain growth, aluminum prices above 21,000 yuan/ton could further suppress buying, compounded by export headwinds and SME overcapacity, narrowing the industry’s overall upside.