Aluminum Wire and Cable Enterprises to Take Collective Leave Next Week; Post-Holiday Order Expectations Vary [SMM Analysis]

According to SMM, aluminum wire and cable enterprises are expected to transition into the holiday phase next week. Some top-tier enterprises indicated that their production schedules are expected to remain favorable, with production departments maintaining operations even during the Chinese New Year. However, more enterprises, considering labor costs, have arranged holidays around the national holiday period, with most resuming work between the eighth and tenth day of the lunar calendar, and have largely completed raw material stockpiling. Regarding post-holiday production plans, feedback from enterprises varies. Based on statistical data, the State Grid's delivery volume in Q1 next year is still expected to decline. SMM believes that the status of orders on hand varies among enterprises, with staggered delivery periods likely. Additionally, differences in temperature between the north and south lead to varying levels of enthusiasm for cargo pick-up among end-users in different regions, resulting in inconsistent production schedules. In summary, SMM expects the aluminum wire and cable industry's operating rate to remain weak before and after the holiday. When the operating rate will see a turning point remains to be closely monitored, particularly during the State Grid's concentrated delivery phase and the operation of new energy grid connection orders.

This week, the operating rate of leading domestic aluminum wire and cable enterprises recorded 60%, down 3.6% WoW. The operating rate continues to face downward pressure due to delayed cargo pick-up by end-users, year-end enterprise inventory adjustments, and non-concentrated delivery times for finished products. According to SMM, wire and cable enterprises in regions such as Hebei and Jiangsu have gradually entered a rest phase this week, while top-tier enterprises are expected to transition into the holiday phase next week, with the industry largely entering a rest period. In terms of sub-sectors, the State Grid's cargo pick-up in northern regions has mostly concluded, though some provincial grid orders still show willingness for pick-up. Grid connection orders for PV and wind power have largely paused, and enamelled wire orders also show a weakening trend. In summary, SMM believes that the aluminum wire and cable industry is primarily affected by seasonal factors in the short term, and the operating rate is expected to decline significantly next week.