The Operating Rate of Aluminum Downstream Terminated Eight Consecutive Increases[SMM Weekly Downstream Survey]

The operating rate of leading domestic aluminum downstream processing enterprises dropped back slightly by 0.8 percentage points WoW to 62.6%, ending an eight-week consecutive increase, and fell by 0.6 percentage points YoY. By sector, the operating rates of primary aluminum alloy, aluminum plate/sheet and strip, aluminum extrusion, aluminum foil, and secondary aluminum alloy generally pulled back, with only aluminum wire and cable maintaining stable operations. Current downstream consumption showed divergence, with strong support from power grid construction and PV installation demand. Orders on hand for wire and cable enterprises exceeded expectations, and the PV frame sector maintained full production due to new electricity price policies and the pullback in aluminum prices. However, traditional consumption sectors continued to face pressure, with demand for construction extrusion shrinking YoY, industrial extrusion for the automotive sector dragged down by technical barriers and export fluctuations, and demand for packaging foil and air-conditioner foil showing weakness. Secondary aluminum alloy also remained weak due to sluggish end-user orders in sectors like automotive. In the short term, the aluminum wire and cable sector is expected to maintain high operating rates with the increase in power grid tenders and the PV installation rush, and PV frame demand remains resilient, but the risk of declining processing fees needs to be monitored. Sectors like aluminum plate/sheet and strip and aluminum foil may continue to see slight pullbacks in operating rates due to overseas trade friction and slowing domestic end-user stockpiling. The primary and secondary aluminum alloy sectors may continue to be constrained by insufficient orders and inventory pressure. Close attention should be paid to the impact of US tariff policy adjustments on export orders and the disturbance of aluminum price fluctuations on downstream procurement sentiment. SMM predicts the operating rate may rebound slightly by 0.1 percentage points to 62.7% next week.

From the Perspective of Different Sections：

Primary aluminum alloy: The weak recovery trend in the domestic primary aluminum alloy industry encountered resistance this week. The operating rate of leading enterprises dropped by 0.6 percentage points WoW to 55.4%, marking the first decline in the first week of April after a continuous mild recovery since March. Supply side, although most enterprises maintained stable production, the ample spot supply in the circulation sector remained unchanged, coupled with high finished product inventories and downstream raw material stockpiling, the overall industry lacked momentum for production increase. The demand-side transmission mechanism showed delays. Although the current downward shift in aluminum prices partially alleviated the cost pressure of downstream restocking, the weak release of new orders from end-users suppressed the willingness to restock. Downstream processing enterprises' risk aversion sentiment intensified, and the spot market trading activity remained sluggish. Notably, there is an expectation of adjustments in the US tariff policy on Chinese aluminum alloy wheel hubs, which may have a periodic impact on export-oriented deep-processing enterprises. SMM predicts that the industry's operating rate will continue to show a slight downward trend next week.

Aluminum plate/sheet and strip: The operating rate of leading aluminum plate/sheet and strip enterprises dropped by 1 percentage point WoW to 70% this week. Aluminum prices remained relatively stable this week, and downstream customers' wait-and-see sentiment was less intense than last week, with increased enthusiasm for cargo pick-up. Leading aluminum plate/sheet and strip enterprises continued destocking. However, the seasonal warming of demand did not bring strong optimistic expectations to the entire market. Since late March, the peak season fatigue has emerged, and the marginal increase in market demand has gradually declined. Additionally, with the gradual landing of new capacity in the new year, the supply-demand relationship remains in an oversupply state. It is expected that the operating rate of leading aluminum plate/sheet and strip enterprises will show a slight downward trend.

Aluminum wire and cable: The operating rate of domestic leading aluminum wire and cable enterprises was 60% this week, unchanged from last week. From a long-term perspective, the current operating rate of aluminum wire and cable enterprises continues to climb steadily, driven by the accelerated landing of new orders and the arrival of the power grid delivery cycle. In terms of orders, the first quarter of this year saw a continuous flow of power grid orders. The first batch of UHV and the first batch of power transmission and transformation material tenders have been announced, and the second batch of power transmission and transformation tenders will be announced on April 8, 2025. Additionally, provincial grid distribution network agreements and material agreement orders are also being tendered, leading to an unexpected increase in orders on hand for aluminum wire and cable enterprises. As we officially enter April, the resumption of power grid projects and the PV installation rush are expected to boost the demand for aluminum and aluminum alloy wire and cable, accelerating the production schedule of enterprises. The industry's operating rate is expected to remain high in April.

Aluminum extrusion: The overall operating rate of the domestic aluminum extrusion industry dropped by 2 percentage points WoW to 59% this week. By sector: In industrial extrusion, the market showed a differentiated pattern as it entered the traditional peak season in April. According to the SMM survey, small and medium-sized enterprises faced systemic pressures such as high technical barriers, extended payment periods, and strict quality control in the automotive supporting sector this week, mainly producing customized spot orders. Coupled with the recent fluctuations in the international trade environment leading to a decline in export orders, the overall industry operating rate showed a slight pullback this week. Although top-tier enterprises maintained high-load operations, production YoY declined, and the momentum for new orders was insufficient, raising concerns about a "peak season without peak." The PV frame sector remained high, with the new PV on-grid tariff policy boosting the effect and the pullback in aluminum prices stimulating terminal procurement. Downstream module enterprises actively procured, and top-tier enterprises basically maintained full capacity operations, but the decline in processing fees and cut-throat competition remained evident. The construction extrusion sector's operating rate was basically flat WoW but still below the level YoY. Enterprises reported that production this week was based on orders on hand, with no new orders added. Although the SMM survey showed that some enterprises in South China recently obtained a small number of scattered export orders from Southeast Asia and Europe by actively bearing part of the tax rebate costs, and were supported by infrastructure projects, enterprises generally adopted a low raw material inventory strategy to cope with the lack of visibility in long-term orders, and the market generally remained skeptical about the sustainability of demand. SMM will continue to monitor the sustainability of PV installation increments on extrusion demand, the impact of the differentiated pattern in industrial extrusion, and the actual order situation in the construction sector.

Aluminum foil: The operating rate of leading aluminum foil enterprises dropped by 1 percentage point WoW to 74.7% this week. The aluminum foil market remained relatively stable during the week, with no significant changes in demand for packaging foil, battery foil, and air-conditioner foil. In the short term, supported by the peak season, the operating rate of leading enterprises can still be maintained at a relatively high level. However, after downstream terminal customers concentrated on placing orders and stockpiling in March, the order volume in April began to show fatigue. Additionally, overseas market trade frictions are frequent, bringing more uncertainty to the future operating rate of leading aluminum foil enterprises.

Secondary aluminum alloy: The operating rate of leading secondary aluminum alloy enterprises slightly pulled back by 0.5 percentage points WoW to 56.4% this week. After the "Golden March" expectation fell through, downstream orders have shown a steady weakening trend since April. Die-casting enterprises' purchase willingness is low, and the stocking demand before the holiday has not been significantly released. Due to factors such as order shrinkage, production losses, or financial pressure, some enterprises began to reduce their operating levels and took the opportunity to conduct equipment maintenance. In the short term, the industry's operating rate is expected to remain stable or show a slight downward trend.