"Golden Three" Aluminum Consumption Varies, Cables and Profiles See Order Surge, Aluminum Alloys Struggle to Increase Production [SMM Downstream Weekly Survey]

SMM March 20, 2025: This week, the operating rate of leading domestic aluminum downstream processing enterprises saw a slight increase, up 1.2 percentage points WoW to 62.8%, maintaining a mild recovery trend. By sector, the operating rate of aluminum plate/sheet and strip edged up, benefiting from the recovery of overseas orders and stable demand for batteries and automobiles domestically; the operating rate of aluminum wire and cable increased 3% WoW, driven by accelerated grid investment and a rush for PV installations, boosting order recovery; the operating rate of aluminum extrusion rose 3% to 60%, with PV extrusion at full capacity becoming a highlight, and the NEV industry chain remaining robust, though construction extrusion still polarized; the operating rate of aluminum foil inched up 0.3%, supported by ample orders from leading producers. The aluminum alloy sector encountered resistance, with primary alloy production momentum constrained by high inventory and aluminum price volatility, while secondary alloy was hindered by persistently weak end-use consumption. Overall, current demand from PV, NEVs, and grid infrastructure forms the core support, whereas traditional construction extrusion and internal combustion engine vehicles are constrained by financial pressure and weak end-use consumption, failing to meet peak season expectations. High aluminum prices also continue to suppress downstream procurement. In the short term, the aluminum processing industry is expected to maintain a "stable and rising" trend, but caution is needed regarding the impact of aluminum price fluctuations on downstream cargo pick-up sentiment. SMM predicts that the operating rate will rise 0.4 percentage points WoW to 63.3% next week. Primary Aluminum Alloy: This week, the operating rate of leading domestic primary aluminum alloy enterprises remained flat WoW at 55.8%, with the industry's recovery momentum continuing to weaken. On the supply side, although most enterprises maintained relatively stable production, the market had an ample supply of goods, and both in-plant and downstream raw material inventories remained high, limiting further production increases. On the demand side, new orders for downstream die-casting enterprises were insufficient, coupled with high and volatile aluminum prices, leading to a general just-in-time procurement approach under risk-averse sentiment, with spot trades remaining sluggish. SMM expects the operating rate of primary aluminum alloy to continue its slow upward trend next week, but attention should be paid to the inhibitory effect of high aluminum prices on downstream demand. Aluminum Plate/Sheet and Strip: This week, the operating rate of leading aluminum plate/sheet and strip enterprises rose 1 percentage point to 71%. The market performance was stable, with leading enterprises continuing steady production. Overseas orders, after a low period in January and February, have gradually recovered, and domestic end-use demand for batteries and automobiles remains relatively stable during the peak season. Both internal and external drivers are expected to push the operating rate slightly higher in the short term. However, recent large fluctuations in domestic aluminum prices have affected downstream cargo pick-up sentiment to some extent, and the accumulation of finished product inventories may dampen the production enthusiasm of aluminum plate/sheet and strip enterprises. It is expected that the operating rate of leading aluminum plate/sheet and strip enterprises will remain stable or slightly increase in the short term. Aluminum Wire and Cable: This week, the operating rate of leading domestic aluminum wire and cable enterprises was 58%, up 3% WoW. In terms of orders, as temperatures warm and projects resume, joint tender orders across provinces have been announced, and grid investment is accelerating. Additionally, there is a clear trend of post-holiday "rush for installations" in the PV sector, boosting orders on hand. The seasonal recovery of grid infrastructure and the release of new energy grid connection demand are driving the recovery of the aluminum wire and cable industry. It is expected that the aluminum wire and cable industry will transition from the off-season to a busy delivery phase in April, with the continuous release of new orders, and the operating rate will maintain an upward trend. Aluminum Extrusion: This week, the operating rate of the domestic aluminum extrusion industry increased 3 percentage points WoW to 60%, showing structural differentiation across application areas. In the industrial extrusion sector, the NEV-driven pattern continued, with the NEV industry chain maintaining high activity, and top-tier enterprises keeping their capacity utilization rates high. Some small and medium-sized processing enterprises achieved order stability by focusing on high-value-added products (such as motor housings and battery cell casings). Shipbuilding feedback indicates that, although current orders are at normal levels, the trend towards lighter ship bodies is driving continuous aluminum demand. PV extrusion became the biggest highlight, with mainstream enterprises basically operating at full capacity due to surging procurement demand from downstream component manufacturers, and finished product turnover days compressed to within 10 days. Notably, to prepare for the "531" grid connection period, some enterprises have started to stockpile mainstream models in advance. The construction extrusion sector showed a polarized trend, with leading enterprises maintaining normal production schedules through channel advantages, but without significant improvement in order structure; small and medium-sized manufacturers, constrained by financial pressure, kept their operating rates low, only producing window and door orders on a cash-and-carry basis. SMM will continue to track industry dynamics, focusing on the pace of end-use demand release and marginal changes in regional industrial policies. Aluminum Foil: This week, the operating rate of leading aluminum foil enterprises increased 0.3 percentage points to 75.7%. With the traditional peak season in March more than halfway through, demand for various aluminum foil products continues to recover. Although recent aluminum price volatility has somewhat dampened the ordering enthusiasm of downstream customers, the relatively abundant orders on hand for leading enterprises have not yet significantly impacted production. The operating rate of leading aluminum foil enterprises is expected to remain stable in the future. Secondary Aluminum Alloy: This week, the operating rate of leading secondary aluminum enterprises remained stable WoW at 56.5%. More than half of March has passed, and terminal consumption in the secondary aluminum market remains depressed. Downstream enterprises reported a significant YoY decline in March orders, leading to a reduction in orders for secondary aluminum plants. Due to the failure of the "Golden March" peak season expectations, secondary aluminum plants have struggled to raise their operating levels, mostly maintaining stable production, while poor sales have led to a continuous accumulation of finished product inventories. Although the theoretical profit margin for the ADC12 industry remains positive, if the market continues to be sluggish, the industry could fall into losses, making production cuts inevitable. In the short term, the industry's operating rate is expected to mainly run steadily, with a focus on the recovery of end-use demand. 》Click to view the SMM Aluminum Industry Chain Database (SMM Aluminum Team)

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