Aluminum prices fluctuate at highs, coupled with weakening rigid demand, leading to a continuous decline in the operating rate of PV frames [SMM Analysis]

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SMM News on May 22:

PV aluminum extrusion: This week, the operating rates of sample enterprises in the PV module frame sector continued to diverge. The operating rates of some leading enterprises in east China dropped to 70%. According to an SMM survey, some small and medium-sized enterprises in Anhui reported that their PV module frame orders were mainly from existing long-established customers, and they had suspended taking orders from new customers. Meanwhile, the operating rates of small and outsourced enterprises in east China and Henan remained at a low level of 40%.

Raw material prices: During the period (May 12-15, 2025), the center of the average spot price of aluminum moved upward. The SMM A00 weekly average price was 20,095 yuan/mt, up 0.91% from the previous week. On the macro front, there were no new developments in the US-China tariff war this week. However, due to the controversy over the US tax cut and spending bill, as well as the weak demand for the 20-year US Treasury bond auction, market concerns about the increase in US debt and the weakening economic outlook intensified, and market risk aversion sentiment rose. Domestically, signals of monetary policy easing were released, improving market expectations and stimulating economic growth and investment and consumption demand. On the fundamentals side, there were relatively small changes in the short-term supply side. On the cost side, the specific impact of the Guinea incident on local bauxite supply remains to be assessed, and it may provide short-term sentiment-based cost support for alumina. On the demand side, it faces dual pressures from domestic seasonal weakness and trade uncertainties. In the short term, the operating rates of aluminum processing enterprises will be under pressure. Overall, the current low inventory provides support for aluminum prices. However, the lack of unexpectedly positive macro factors during the week to further drive aluminum prices, as well as the off-season pressure on the demand side limiting upside room, aluminum prices are expected to remain range-bound in the short term. Attention should be paid to domestic and overseas demand performance and bauxite supply conditions. Next week, the most-traded SHFE aluminum 2507 contract is expected to trade within the range of 19,800-20,500 yuan/mt.

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