The resumption progress of power grid projects showed promising results, and the operating rate of aluminum wire and cable rebounded in preparation for the delivery cycle [SMM Analysis]

According to SMM statistics, the comprehensive operating rate of the domestic aluminum wire and cable industry reached 52.89% in March 2025, up 5.62% MoM from February and up 0.48% YoY from February last year, maintaining a stable performance. By enterprise size, the operating rate of large enterprises increased by 12.16% MoM to 68.91%, medium-sized enterprises rose by 1.13% MoM to 45.71%, and small enterprises improved by 2.54% MoM to 26.27%. The current rebound in operating rates is mainly attributed to the significant recovery in the operating rates of leading enterprises, with large enterprises recording an operating rate of 68.91%, up 12.16% MoM, showing a remarkable performance, while small and medium-sized enterprises are in a phase of mild recovery.

The main reasons for the increase in industry operating rates in March are twofold. On one hand, after the Chinese New Year holiday, enterprises resumed normal production schedules, coupled with top-tier enterprises stockpiling in advance to cope with subsequent delivery pressures. On the other hand, the accelerated implementation of new orders allowed top-tier enterprises to rush to deliver orders during the off-season, facilitating the alleviation of future delivery pressures.

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 are expected to be announced in early to mid-April. The new ground and conductor lines in UHV power transmission and transformation exceeded 300,000 mt, while provincial grid distribution network agreements and material agreement orders are also being tendered. Aluminum wire and cable enterprises have seen an unexpected increase in orders on hand, with order implementation accelerating compared to previous years. Additionally, driven by PV policies, new installation orders in the market continue to be released, and aluminum alloy wire and cable orders are performing well, but caution is needed as demand may weaken rapidly after the policy period ends.

Data from the National Energy Administration shows that power grid engineering investment in January-February 2025 reached 43.6 billion yuan, up 33.5% YoY, achieving a "good start," which echoes the accelerated implementation of power grid-related orders. In terms of UHV projects, the Datong-Huailai-Tianjin South 1000 kV UHV AC project has commenced, and the Gansu-Zhejiang ±800 kV UHV DC transmission project has entered the full construction phase. Projects such as Hami-Chongqing and Jinshang-Hubei are also progressing as planned, indicating that UHV projects have largely resumed and quickly entered full-capacity, high-intensity construction.

SMM believes that the aluminum wire and cable industry has officially emerged from the off-season, with industry operating rates entering an upward trajectory. Driven by the annual power grid investment target of 650 billion yuan, the industry's order structure presents a pattern of "short-cycle fast delivery + long-cycle stable demand." The operating rate is expected to maintain mild growth in Q2, and with the volume of UHV projects in H2, industry capacity utilization rates are expected to break through.