Weak balance of aluminum plate/sheet, strip and foil continues in May, export window in June unable to offset weak domestic demand [SMM Analysis]

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SMM, June 11, 2025:

According to SMM statistics, in May 2025, China's aluminum plate/sheet and strip production reached 1.151 million mt, with an industry operating rate of 66.37%, down 0.86 percentage points MoM. Aluminum foil production was 441,000 mt, with an industry operating rate of 69.50%, down 1.02 percentage points MoM.

[May Review] In May, the aluminum plate/sheet, strip and foil industry maintained an overall "weak balance" situation, with the supply-demand imbalance continuing to deepen. The operating rate in the aluminum plate/sheet sector stabilized after minor fluctuations, mainly driven by the phase-wise cooling of the Sino-US trade war, which spurred rush to export by end-users in home appliances, electronics, and other sectors. However, weak domestic demand posed a significant drag: construction demand, a traditional off-season highlight, was short-lived, while automotive and electronics orders remained relatively stable but could not offset the overall decline. Meanwhile, downstream price collection triggered risks of processing fee discounts, intensifying market competition. The aluminum foil sector fluctuated downward, with notable demand differentiation—orders for new energy-related products such as battery foil and brazing foil weakened, reflecting inventory pressure across the industry chain. Meanwhile, household foil and container foil were mired in price wars, with processing fees plummeting, suppressing production. Despite the window of opportunity for exports provided by the easing of Sino-US tariffs, the industry still faced three major pressures (demand differentiation, deepening off-season, and high inventory), and the overall contraction trend remained unchanged.

[June Outlook] In June, the aluminum plate/sheet, strip and foil industry is expected to continue its weak and volatile pattern, with the operating rate likely to face slight pressure. For aluminum plate/sheet, the easing of Sino-US trade tensions may continue to provide an export buffer, coupled with domestic 618 sales promotions stimulating stockpiling demand from end-users in automotive, electronics, and other sectors. However, weak domestic demand during the traditional off-season remains unresolved, and contradictions of overcapacity and export sustainability are in question. If destocking falls short of expectations, it will inversely suppress procurement. The aluminum foil sector presents opportunities for a phased rebound: 618 sales promotions and summer high temperatures may boost demand for air-conditioner foil and container foil, while the easing of Sino-US tariffs also benefits home appliance and electronics exports. However, weak new energy support, ongoing price wars in low value-added categories, and unsustainable growth in overseas orders mean the industry remains constrained by trade uncertainties and inventory pressure. Subsequent focus will be on policy stimuli (such as consumption subsidies) and global economic signals for their potential impact on H2 demand.

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