Declining demand and cost pressures led to a drop in the operating rate of secondary aluminum producers in April [SMM Analysis]

Survey data on the operating rates of secondary aluminum alloy enterprises by region and enterprise size in April 2025:

According to the SMM survey, the operating rate of secondary aluminum producers in April 2025 fell by 2.4 percentage points MoM from March to 41.6%, and declined by 4.6% YoY.

The decline in the operating rate of the secondary aluminum industry in April was mainly constrained by two factors: weakening demand and production losses. On the demand side, the consumer end continued the weak trend seen in March, with the "golden March and silver April" peak season expectations falling short. Downstream orders weakened, and end-users only purchased as needed. Data from the China Association of Automobile Manufacturers (CAAM) showed that automobile production and sales in April fell by 12.9% and 11.2% MoM, respectively. Meanwhile, the US tariff policy suppressed orders for export-oriented die-casting enterprises, with some die-casting plants experiencing order declines of over 50%. On the production side, raw material prices declined at the beginning of the month in line with the correction of bulk commodities, leading to a temporary improvement in the industry's theoretical profitability. However, after the easing of trade tensions in late April, the rebound in aluminum scrap and copper prices pushed up raw material costs. Despite the continued decline in silicon prices, the industry's profit margins narrowed again due to weak price increases for alloy ingot finished products, ultimately resulting in losses.Constrained by weak demand and cost pressures, the operating rate of secondary aluminum plants declined in April. Enterprises alleviated inventory pressure through production cuts, leading to an overall contraction in industry supply.

Entering May, the secondary aluminum industry faces dual pressures from tightening raw material supply and a deepening off-season in consumption, while the tariff situation has seen a turnaround. On May 12, a joint statement was issued following the China-US Geneva Economic and Trade Talks, with both sides agreeing to reduce tariffs by 91% and setting a 90-day observation period. Downstream enterprises in the secondary aluminum industry responded cautiously, generally lacking the motivation to rush exports and adopting a wait-and-see attitude. Although the easing of tariffs brings hope for order growth, it will take time for market conditions to translate into production, and the effect of boosting consumption is unlikely to be immediately apparent. Based on this, it is expected that the operating rate of secondary aluminum will continue to decline in May, and close attention will still need to be paid to the actual boosting effect of tariff policy adjustments on the demand side in the subsequent market performance.