Procurement demand from module factories declines, operating rate of PV frame profiles under pressure [SMM Analysis]

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SMM News on June 5:

PV aluminum extrusion: This week, the operating rates of sample enterprises in the PV frame sector continued to diverge. The operating rates of some leading enterprises in east China declined slightly WoW, mainly due to weak purchase sentiment from downstream module manufacturers and enterprises' relatively pessimistic expectations for module scheduled production in June. However, according to SMM, some new production capacities in Anhui are steadily ramping up and are expected to reach full capacity in H2. Meanwhile, according to SMM surveys, some small and medium-sized enterprises in Anhui and Henan reported that their PV production lines are gradually exiting the market, retaining only orders from some long-established customers. Their operating rates for PV frames remain at a low level of 30%.

Raw material prices: During the period (June 3, 2025 - June 5, 2025), the center of the average spot price of primary aluminum shifted downward. The SMM A00 weekly average price was 20,216.67 yuan/mt, down 0.46% from the previous week's average. On the macro side, the escalation of US import tariffs on steel and aluminum took effect, suppressing global aluminum trade liquidity, particularly impacting countries highly dependent on exports to the US, and exacerbating regional supply surplus pressure in the short term. The US Fed's Beige Book revealed the current situation of slowing economic activity and excessive inflationary pressures in the US. Policy uncertainty simultaneously intensified market risk-averse sentiment, and enterprises' choice to pass on costs due to the economic environment may suppress end-use demand. The rebound in China's manufacturing PMI and improvement in export indicators in May provided demand support, indicating that the resilience of the domestic economy remains. On the fundamentals side, domestic primary aluminum operating capacity remained stable, with expectations of a slight decrease in subsequent casting ingot volumes. Domestic aluminum ingot inventory temporarily maintained a destocking trend. On the cost side, the impact of the Guinea mine incident on alumina prices has eased, and the real-time cost of primary aluminum declined slightly MoM. On the demand side, enterprises face dual pressures from domestic seasonal weakness and trade uncertainties. In the short term, the operating rates of aluminum processing enterprises will be under pressure, and the off-season atmosphere will intensify. New orders in sectors such as construction materials, PV, and automobiles are showing signs of weakness. Overall, the current low inventory provides support for aluminum prices. However, the overall bearish macro environment during the week has placed downward pressure on aluminum prices at high levels, and the off-season pressure on the demand side limits upside room. Spot aluminum ingots in major consumption areas will face a situation of weak supply and demand. In the short term, aluminum prices are expected to fluctuate rangebound. SMM expects that the most-traded SHFE aluminum 2507 contract will trade between 19,500-20,300 yuan/mt next week, and LME aluminum will trade between $2,400-2,520/mt.

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