The PMI of the aluminum processing industry fell by 9.7% MoM in June - all sub-sectors were generally under pressure, with little improvement expected during the off-season [SMM Downstream In-depth Analysis].

June 29, 2025 News:

The composite PMI of the aluminum plate/sheet and strip industry has remained in the contraction territory. The weakening of domestic end-use demand has intensified, with downstream customers slowing down their cargo pick-up pace. The finished product inventories index remains high, and coupled with the lack of significant improvement in exports, companies have cut production. It is necessary to continuously monitor the progress of production cuts and destocking, as well as the effectiveness of policy incentives. For aluminum foil enterprises, the "volume discount" strategy adopted during the month has squeezed profit margins, putting corporate cash flows under pressure. Coupled with production cuts in downstream sectors dragging down orders, there is little hope for improvement in July. In terms of construction extrusion, enterprises report that the real estate market has not yet recovered, with a severe shortage of new orders. Orders on hand are insufficient to support production for the current month. It is expected that in July, the construction extrusion industry will still be under the shadow of the traditional off-season, and the PMI of construction aluminum extrusion will continue to remain below the 50 mark. In terms of industrial extrusion, except for a few sectors with stable customer bases that have not been affected by the off-season, the off-season atmosphere is strong in other areas. Amidst severe cut-throat competition in processing fees, corporate profitability is being squeezed. It is expected that there will still be little hope for improvement in July, and it is necessary to continuously monitor the actual landing of orders. For aluminum wire and cable, the next delivery cycle has not yet arrived, and market rigid demand is insufficient. Wire and cable factories plan to achieve a dual reduction in raw material and finished product inventories to alleviate capital operation pressures. In the primary alloy sector, under the triple pressures of weak demand during the traditional off-season, the pending implementation of China-US tariffs, and the negative feedback from high aluminum prices, the downward pressure on the industry has significantly intensified, and the PMI may face further pressure. In the secondary alloy sector, despite the official listing of cast aluminum alloy futures on June 10, which has increased market trading activity, the actual terminal consumption performance remains sluggish and has failed to effectively support the market.

Looking specifically at product types:

Aluminum plate/sheet and strip: In June, the composite PMI of China's aluminum plate/sheet and strip industry recorded 39.1%, a significant drop of 10.5 percentage points MoM, deeply entrenched in the contraction territory. Sub-indices show that both the production index (29.2%) and the new orders index (29.2%) are significantly below the 50 mark, reflecting the intensified weakness of domestic end-use demand, particularly a MoM decline in orders from the construction sector. Coupled with the high aluminum prices hovering near 21,000 yuan/mt, downstream customers have slowed down their cargo pick-up pace, and the finished product inventories index remains high (60.8%), forcing companies to cut production. Although the new export orders index (42.8%) is higher than the production index, the boost from exports is limited. The positive effects of China-US consultations only support certain sectors such as home appliances and kitchen and bathroom products, and are insufficient to offset the overall weak consumption. The purchasing volume index (44.5%) and the raw material inventories index (46.1%) indicate that companies are cautious in stockpiling. Overcapacity and insufficient domestic demand have led to an increased risk of price wars. Looking ahead, with the deepening of the off-season and inventory backlogs, the aluminum plate/sheet and strip PMI is expected to continue to operate in the doldrums. It is necessary to monitor the progress of production cuts and destocking, as well as the effectiveness of policy incentives.

Aluminum foil: The composite PMI of the aluminum foil industry in June was 45.3%, pulling back slightly MoM but remaining in contraction territory. Among the sub-indices, the production index (41.2%) and the new orders index (41.2%) were both below the 50 mark, mainly due to the sharp decline in demand for packaging foil since April, which was caught in a price war (with processing fees as low as 5,800 yuan/mt). Enterprises' strategy of "volume discount" squeezed profit margins, and the finished product inventories index (52.8%) continued to face pressure. The new export orders index (47.3%) contracted, indicating insufficient export support. Although normal production scheduling of battery foil and brazing foil provided partial support, downstream production cut plans dragged on orders. The impact of high aluminum price fluctuations was limited (with monthly average price settlements buffering risks), but the destocking task fell short of expectations, and the inventory crisis loomed. It is expected that aluminum foil demand will weaken overall in July, with the industry's PMI expected to contract further, processing fees continuing to face pressure, and enterprises' cash flow facing challenges.

Construction extrusion: The PMI of construction aluminum extrusion in June pulled back slightly to 40.44%, falling below the 50 mark. The construction extrusion industry officially entered the traditional off-season. Most enterprises in Shandong, east China, Hebei, and south China reported a significant decline in production in June. Enterprises reported that the real estate market had not yet warmed up, with a severe shortage of new orders and insufficient orders on hand to support production in the month, leading to a sharp decline in the production index to 29.6% and the new orders index to 37.69%, pulling down the procurement volume index to 29.15%. Coupled with severe cut-throat competition in processing fees for spray coating and thermal insulation bridge-cut extrusions, enterprises generally adopted low raw material inventories to maintain healthy cash flow, with the raw material inventories index sliding to 34.75%. Overall, it is expected that the construction extrusion industry will remain in the traditional off-season in July, with the PMI of construction aluminum extrusion continuing to stay below the 50 mark.

Industrial extrusion: The composite PMI of the industrial extrusion industry in June was recorded at 37.61%, pulling back sharply to below the 50 mark. Looking at the sub-indices, the production index was recorded at 30.33%, and the new orders index at 29.0%. According to SMM, some leading enterprises of PV frames in east China reported a significant decline in production in June, coupled with an expected decline in new orders in July, with production orders at month-end failing to connect with orders for the next month. Meanwhile, although other industrial extrusions, such as those for rail transit, aerospace, and 3C deep processing, had relatively stable customer bases and normal production within the month, enterprises in the auto parts sector reported severe cut-throat competition, a severe shortage of orders on hand, and a continuous decline in operating rates. Processing enterprises reported that current processing fees might decline further, squeezing enterprises' profitability. Enterprises lacked sentiment for raw material stocking, with most maintaining only safe inventories, leading to a decline in the procurement volume index to 21.05% and the raw material inventories index to 28.68%. It is expected that the PMI of the industrial extrusion sector will be in the doldrums in June, and the PMI of industrial aluminum extrusion will continue to stay below the 50 mark. SMM will continue to monitor the actual implementation of orders.

Aluminum wire and cable: In June, the composite PMI of the domestic aluminum wire and cable industry was recorded at 40.2%. After operating above the 50 mark for four months, the index fell back below 50, indicating a slight decline in the industry. Since entering June, the concentrated delivery cycle of State Grid in H1 has passed, and the industry has faced slow matching of new orders and a decline in delivery volume. The operating rate of enterprises has dropped significantly, with the production index recorded at 37.11%. Regarding new orders, some State Grid orders were opened for bidding in early June, but the bidding pace slowed down significantly in mid-to-late June. As a result, the new orders index was recorded at 31.42%, indicating a significant decline in new orders this month compared to May. In terms of procurement, the center of aluminum prices continued to rise in June, while enterprises reduced their operating rates due to decreased shipments, leading to weakened rigid demand and a slower procurement pace. Enterprises are reducing their raw material inventories, with the raw material inventory index recorded at 43%. The finished product inventory index was recorded at 37.76%, indicating that enterprises are currently in the stage of reducing finished product inventories to alleviate financial pressure on their operations. Coupled with the fact that the next delivery cycle has not yet arrived, enterprises are maintaining a wait-and-see attitude. Looking ahead to July, industry shipments are still expected to decline, with insufficient rigid demand in the market. Coupled with high aluminum prices, wire and cable manufacturers aim to achieve a dual reduction in raw material and finished product inventories to alleviate financial pressure. It is expected that the aluminum wire and cable PMI index in July 2025 may operate below the 50 mark.

Primary aluminum alloy: In June, the PMI of primary aluminum alloy was recorded at 36.5%, a significant drop of 5 percentage points MoM from May, continuing to stay below the 50 mark with a deepening contraction, indicating a significant increase in downward pressure on the industry. The core contradictions lie in weak domestic demand and cost pressures: the production index (22.9%) and the new orders index (22.9%) both hit new lows for the year, reflecting a contraction in domestic demand during the off-season and high aluminum prices, severely suppressing terminal cargo pick-up willingness and new orders. Meanwhile, the high product inventory index (58.8%) contrasts with the low procurement volume index (26.5%), highlighting enterprises' passive inventory buildup, cautious procurement, and financial pressure transmission. In terms of exports, the new export orders index (50.0%) remained flat with the 50 mark, but relied on structural support from alternative channels such as Mexico, which could not offset the decline in orders to the US and the overall weakening of external demand. Monthly operating rates showed a "stable start followed by a decline," with orders remaining stable in the first half of the month, but cargo pick-up slowing down in the mid-to-late month due to sustained high aluminum prices and seasonal factors. Some enterprises marginally reduced their operating rates due to inventory and financial pressure, and most sample enterprises have planned production cuts in July. Looking ahead, the industry's weak and stable pattern is unlikely to break under the persistent triple pressures of sluggish demand in the traditional off-season, unresolved Sino-US tariffs, and high aluminum price feedback. The PMI may face further downward pressure, with substantial recovery awaiting clearer trade policies and effective alleviation of cost pressures.

Secondary Alloy:In June, the PMI for the secondary aluminum industry rebounded slightly MoM to 45.0%, but remained below the 50 mark. Demand for secondary aluminum deepened into the off-season in June, with weak growth in end-user orders limiting upside room for ADC12 prices, while low-priced supplies further intensified competitive pressure. Although cast aluminum alloy futures were officially listed on June 10, boosting market activity, actual end-user consumption remained sluggish, failing to effectively support the market. Faced with insufficient new orders and production losses due to high raw material costs, the overall operating rate of the secondary aluminum industry declined again in June. For July, the off-season effect persists, as automakers may cut production plans due to scheduled high-temperature holidays or finished product inventory pressures, further suppressing new order growth and operating rates for secondary aluminum plants. The industry PMI is expected to remain below the 50 mark in July.

Brief Review:

In June, the aluminum processing industry was deeply entrenched in the off-season, with widespread pressure across segments. The composite PMI for the aluminum processing industry fell below the 50 mark at 40.1%, down 9.7 percentage points MoM and 1.5 percentage points YoY. This was mainly due to the strong off-season sentiment coupled with high aluminum price fluctuations, leading to weak end-use demand and sluggish new orders, prompting many companies to cut production. By segment: The aluminum plate/sheet and strip PMI continued to contract, with companies implementing production cuts due to weak domestic demand, high inventories, and poor exports. Future focus will be on destocking progress and policy effects. Meanwhile, aluminum foil enterprises faced dual pressure on profitability and cash flow due to volume discount strategies, compounded by downstream production cuts dragging orders, with little improvement expected in July. For construction extrusions, the real estate slump resulted in severe shortages of new orders, with insufficient orders on hand to sustain production, leaving the industry mired in the traditional off-season. Its PMI is likely to remain below the 50 mark. Industrial extrusions showed divergence, with strong off-season sentiment prevailing except for a few stable customer segments. Intense competition in processing fees continued to squeeze profits, making the outlook for July equally pessimistic, requiring close monitoring of actual order fulfillment. The aluminum wire and cable market lacked rigid demand as the next delivery cycle had not arrived, prompting manufacturers to plan reductions in raw material and finished product inventories to ease financial pressure. Primary alloys faced triple pressures of weak traditional off-season demand, unresolved Sino-US tariffs, and high aluminum price feedback, with industry downward pressure significantly intensifying, and the PMI likely to face further strain. Although the activity in the secondary alloy sector has increased due to the listing and trading of cast aluminum alloy futures, the sluggish actual consumption at the terminal level has failed to provide effective support for the market.

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(SMM Aluminum Team)