Production and Sales Volume of Enterprises Decline MoM in the Off-Season, Aluminum Processing Industry PMI Falls Below the 50 Mark Again [SMM Downstream In-Depth Analysis]

SMM, December 30, 2024: According to SMM data, the composite PMI of China's aluminum processing industry stood at 42.6% in December 2024, down 4.7 percentage points MoM, remaining below the 50 mark. By segment, the aluminum plate/sheet, strip and foil, aluminum alloy, and aluminum wire and cable sectors faced challenges such as entering the off-season and the fading enthusiasm for export rushes in overseas markets, leading to insufficient orders and declining operating rates for many enterprises. Only the industrial extrusion sector rose above the 50 mark due to active stockpiling by automotive extrusion customers. By product type: Aluminum Plate/Sheet and Strip ↓: The PMI for the aluminum plate/sheet and strip sector was 33.2% in December, down 6.1 points MoM. December remained in the off-season, and the cancellation of aluminum semis export tax rebates came into effect. Many enterprises reported a MoM decline in both domestic and export orders. Additionally, a round of stringent environmental protection inspections in Zhengzhou, a key production hub, led to production restrictions for many local enterprises, resulting in lower operating rates. Under multiple pressures, the sector's PMI continued to operate below the 50 mark. With the Chinese New Year approaching in January, some aluminum plate/sheet and strip enterprises plan to suspend order-taking, cut production, and take holidays. The sector's PMI is expected to remain below the 50 mark in January. Aluminum Foil ↓: The PMI for the aluminum foil sector was 48.8% in December, up 8.4 points MoM. December was still in the off-season, coupled with the implementation of the aluminum semis export tax rebate cancellation, leading to a decline in "export rush" activities. The overall production and sales of the sector continued to decline. With the Chinese New Year approaching in January, some aluminum foil enterprises reported that downstream stockpiling was not active, and both order volumes and production are expected to weaken further. The sector's PMI is anticipated to remain below the 50 mark. Construction Aluminum Extrusion ↓: The composite PMI for the construction aluminum extrusion sector was 46.29% in December, significantly pulling back below the 50 mark. According to the SMM survey, the off-season sentiment in December was more pronounced, coupled with the fact that November's business trips had already consumed December's order volumes. The production index for the month was 48.5%, while the raw material procurement and inventory indices also declined, recording 49.6% and 48.8%, respectively. Additionally, as the Chinese New Year break approached, enterprises faced insufficient new orders, with the new orders index at 41.9%. However, regional differences persisted, with some aluminum extrusion plants in South China receiving year-end rush orders, resulting in moderate production and order indices. Entering January, small and medium-sized enterprises are gradually planning holidays, and the PMI for construction aluminum extrusion is expected to see a significant retreat. Industrial Extrusion ↑: The composite PMI for the industrial extrusion sector was 50.4% in December, barely maintaining above the 50 mark. By sub-index, downstream demand for industrial extrusion weakened in December. Although the production index managed to stay above the 50 mark, the new orders index declined significantly to 43.2%. According to SMM, the production schedules of PV module manufacturers decreased in December and January, leading to a noticeable pullback in operating rates for related aluminum extrusion plants. However, orders for automotive extrusion remained moderate, with top-tier enterprises receiving new orders due to pre-holiday stockpiling. In January, considering the lack of support from the PV sector and the Chinese New Year break, the composite PMI for industrial extrusion is likely to fall below the 50 mark. Aluminum Wire and Cable ↓: The PMI for the aluminum wire and cable sector was 47.2% in December, up 3.0 points MoM. December and November were both traditional off-season months. Many enterprises reported no significant changes in production and order volumes compared to the previous month, while a few reported a slight MoM decrease in orders. However, this did not lead to adjustments in operating rates, resulting in a slight accumulation of product inventories. With the Chinese New Year approaching in January, almost all enterprises expect a reduction in order volumes. Some enterprises also indicated plans to slow down production and lower operating rates during the holiday. The sector's PMI is expected to drop significantly, remaining far below the 50 mark. Primary Aluminum Alloy ↓: The PMI for the primary aluminum alloy sector was 47.2% in December, up 3.0 points MoM. December and November were both traditional off-season months. Many enterprises reported no significant changes in production and order volumes compared to the previous month, while a few reported a slight MoM decrease in orders. However, this did not lead to adjustments in operating rates, resulting in a slight accumulation of product inventories. With the Chinese New Year approaching in January, almost all enterprises expect a reduction in order volumes. Some enterprises also indicated plans to slow down production and lower operating rates during the holiday. The sector's PMI is expected to drop significantly, remaining far below the 50 mark. Secondary Aluminum Alloy →: The PMI for the secondary aluminum sector fell by 10.7 points MoM to 46.9% in December, returning below the 50 mark after three months. On the demand side, in December, car makers rushed to meet annual targets, supported by the imminent end of subsidy policies and increased car purchase demand before the Chinese New Year, which provided some support for secondary aluminum demand. Orders for secondary aluminum plants, especially large ones, remained robust. On the production side, the circulation of aluminum scrap in both domestic and overseas markets continued to tighten in December, causing many secondary aluminum plants to face raw material shortages or losses on production, which hindered operating rate increases. Most enterprises reported stable or declining production compared to the previous month, with tight order deliveries and continued reductions in finished product inventories. To meet production and holiday stocking demand, secondary aluminum plants actively purchased aluminum scrap. However, due to insufficient supply, procurement volumes remained low, and raw material inventories did not increase as expected. Considering the Chinese New Year holiday, the PMI for the secondary aluminum sector is expected to remain below the 50 mark in January. Summary: Across various aluminum processing sectors, operating rates for alloy, plate/sheet, strip and foil, wire and cable, and construction aluminum extrusion sectors weakened significantly MoM in December, with both domestic and export orders cooling on the demand side. Entering January, with the Chinese New Year approaching, market demand is expected to weaken further. Based on production schedules and new orders, SMM expects the PMI for China's aluminum processing industry to remain below the 50 mark in January, with a projected MoM decline of 11.4 percentage points to around 31.2%. 》Click to View the SMM Aluminum Industry Chain Database (SMM Aluminum Team)

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