Downstream Operations Show Uneven Performance, Policy Disturbances Accelerate Aluminum Processing Landscape Adjustment [SMM Downstream Weekly Survey]

SMM April 24, 2025: The operating rate of leading domestic aluminum downstream processing enterprises rose 0.1 percentage points WoW to 62.5% this week, with divergent performance across sectors. The operating rate of primary aluminum alloy increased slightly by 0.4 percentage points to 55.4%, driven by pre-holiday stockpiling, but a slight pullback is expected due to weakening demand and export pressure. Aluminum plate/sheet and strip maintained 68.0%, but aluminum price increases suppressed cargo pick-up, and export risks remain. Aluminum wire and cable held steady at 63.6%, relying on power grid orders, while PV policy uncertainties emerged, potentially affecting distributed PV grid connection orders. Aluminum extrusion structurally rebounded to 59.5%, supported by new orders for PV extrusion, with construction extrusion benefiting from infrastructure project tenders, and automotive extrusion expected to recover due to new orders for popular car models. Aluminum foil remained at 73%, but the approaching off-season and trade friction may lead to a downward trend. Secondary aluminum saw a decline in operating rate to 55.6% due to weak demand. SMM predicts the operating rate may slightly drop by 0.1 percentage points to 62.3% next week. Primary Aluminum Alloy: The operating rate of leading domestic primary aluminum alloy enterprises rose 0.4 percentage points WoW to 55.4%, slightly better than last week’s expectations. The main reason was downstream raw material stockpiling before the Labour Day holiday, leading to a temporary increase in orders and extended production schedules, driving a slight rise in the operating rate. Although the US tariff hike has already put pressure on the export business of downstream aluminum alloy wheel hub enterprises, and the impact on Q2 is pessimistic, SMM has learned that the tariff impact has not yet significantly affected primary aluminum alloy production. From an industry perspective, although the market expects a decline in the primary aluminum alloy industry’s prosperity after the April tariff implementation, and the traditional peak season is nearing its end, domestic end-use demand is seasonally weakening, and industry competition is fierce, some enterprises are actively adjusting production schedules based on orders. Therefore, considering the inertia of end-use market demand and the negative export expectations for aluminum alloy wheel hubs, SMM predicts the industry’s operating rate will continue to slightly decline next week. Aluminum Plate/Sheet and Strip: The operating rate of leading aluminum plate/sheet and strip enterprises recorded 68.0% WoW. Aluminum prices fluctuated upward this week, climbing to the 19,900 level, leading to renewed downstream customer caution and moderate cargo pick-up enthusiasm. According to the latest customs data, aluminum plate/sheet and strip exports in March were 268,900 mt, basically recovering to pre-Chinese New Year levels, but macro headwinds (such as international trade wars and geopolitical conflicts) may have sudden impacts on exports, creating temporary pressure. In the short term, the operating rate of the aluminum plate/sheet and strip industry will mainly fluctuate weakly. Aluminum Wire and Cable: The operating rate of leading domestic aluminum wire and cable enterprises recorded 63.6% this week, basically maintaining last week’s level. As April nears its end, aluminum wire and cable enterprises benefited from power grid orders and the PV installation rush, with ample market orders maintaining high operating rates. In terms of orders, there were no centralized power grid orders this week, mainly scattered orders, with new power grid orders scheduled for H2. Notably, with the implementation of the PV 430 and 531 policies, distributed PV grid connection orders may be affected, and distributed PV installations accounted for about 40% in 2024, posing a risk of marginal weakening. Current power grid orders support high operating rates, but the approaching PV policies may impact market orders, requiring close attention to the subsequent policy effects on the industry chain. The operating rate of aluminum wire and cable enterprises is expected to remain high. Aluminum Extrusion: The overall operating rate of the extrusion industry rose 1 percentage point WoW to 59.5% this week, showing structural recovery. By sector: PV extrusion saw stable production line operations despite the pullback in end-of-month installation rush demand, supported by the continuous influx of new orders in May. Although new orders have declined compared to the peak season levels in March-April, the drop is controllable, and actual production rhythms need further verification after the Labour Day holiday. Automotive extrusion continued to operate weakly, with the operating rate still hovering in the low to mid-range, but SMM learned that some enterprises, which had previously lost orders, have now received new orders for popular car models, which will drive future operating rate increases. Construction extrusion benefited from the continuous release of curtain wall project demand, with large infrastructure projects entering a concentrated tender period (aluminum usage per project generally reaching 800-1,000 mt), driving the operating rate of related enterprises in the industry chain. SMM will continue to monitor order changes across sectors. Aluminum Foil: The operating rate of leading aluminum foil enterprises remained stable at 73% this week. Demand-side changes were relatively small, with air-conditioner foil, battery foil, and brazing foil still produced according to the planned schedule, but order growth slowed significantly. With the approaching Labour Day holiday, the traditional off-season for some aluminum foil products is about to begin, and overseas trade frictions are frequent, leading to a pessimistic market sentiment. The operating rate of aluminum foil enterprises is expected to fluctuate downward. Secondary Aluminum: The operating rate of leading secondary aluminum enterprises fell 0.5 percentage points WoW to 55.6% this week. Aluminum prices stabilized and rebounded during the week, but downstream enterprises’ purchase willingness remained weak, and demand remained sluggish, with both domestic and export orders declining to varying degrees. Secondary aluminum plants generally faced shipment blockages and finished product inventory pressure, forcing enterprises to lower operating levels. As the Labour Day holiday approaches, some die-casting enterprises have pre-holiday stockpiling expectations, which may improve market transactions next week, but low visibility of terminal orders limits stockpiling efforts. The industry’s operating rate is expected to slightly decline in the short term. Click to view SMM Aluminum Industry Chain Database (SMM Aluminum Team)