Chinese aluminium industry adjusts production amid high prices and holiday breaks

As the 2026 Chinese New Year break approaches, SMM conducted a special survey on the production arrangements during the holiday period among some domestic aluminium processing enterprises. Currently, high aluminium prices have heightened the wait-and-see sentiment among downstream enterprises. Combined with factors such as weakened demand, reduced orders, and logistics suspensions during the holiday, these have become the core drivers affecting production arrangements. The detailed survey results for each segment are summarised as follows:

Aluminium extrusion: 

SMM surveyed 29 extrusion enterprises regarding their Chinese New Year break arrangements, involving a total capacity of approximately 7.11 million tonnes. Overall, the average holiday duration for the sample enterprises was about 15.9 days. Among them, 41 per cent of enterprises had longer breaks compared to the same period last year, 28 per cent had holiday durations basically flat with previous years, and 31 per cent had shorter breaks Y-o-Y. Enterprises extending their breaks were mainly those producing construction profiles, with an average break of 22 days; some even suspended all production in February. Enterprises working overtime to ensure delivery were primarily industrial extrusion producers, supported by robust new energy orders such as PV and batteries. PV frame profile manufacturers maintained partial production lines during the holiday. Post-holiday, with the peak season of "Golden March, Silver April," the export rush window for new energy products, and a pullback in aluminium prices, orders previously held back by a wait-and-see approach are expected to be gradually released, supporting the operating rate of enterprises.

Plate/sheet, strip and foil: 

SMM's survey of 19 aluminium plate/sheet, strip and foil enterprises, with a combined annual capacity of 6.22 million tonnes, revealed notable production resilience during the 2026 Chinese New Year break, with the holiday impact hitting a record low. Leading enterprises maintained basically continuous production, with only a few small and medium-sized enterprises taking short breaks of 2–4 days, having minimal impact on overall supply. Pre-holiday logistics capacity declined, but enterprises managed urgent orders by reducing inventories in advance and utilising their own logistics; full truck transport is expected to gradually resume after the eighth day of the lunar new year. Approaching the "Golden March, Silver April" peak season post-holiday, coupled with the export rush window due to adjustments in battery export tax rebates, orders previously suppressed by high aluminium prices are expected to be concentratedly released. With sufficient order backlogs, raw material, and finished product inventory reserves, the industry's operating rate is projected to steadily rebound in late February.

Aluminium wire and cable: 

SMM surveyed 10 aluminium wire and cable enterprises with a total capacity of 752,000 tonnes. Their 2026 Chinese New Year break arrangements fell into three categories: 1) No production suspension during the holiday, supported by ultra-high voltage power grid orders; 2) Breaks of 4–12 days, mainly for high-conductivity orders, balancing production and labour costs; 3) Breaks of 17–21 days due to poor orders, losses, etc., primarily among small and medium-sized enterprises. Excluding enterprises that did not suspend production, the average break duration was about 12.1 days, slightly longer than in previous years. The industry shows significant divergence: top-tier enterprises maintain high operational enthusiasm, while small and medium-sized enterprises continue to face weak orders. The industry's operating rate in February will enter a seasonal deep adjustment.

Secondary aluminium alloy: 

SMM's survey indicates that most secondary aluminium alloy enterprises suspended production between February 5 and 13 during the 2026 Chinese New Year break, with resumptions concentrated around the eighth day of the lunar new year or the Lantern Festival. The average furnace shutdown duration was 8–20 days, about 2 days longer than last year. Due to intensified aluminium price fluctuations, early production cuts downstream, and stricter environmental protection-related controls, industry orders and operating rates in February are expected to pull back significantly. Demand side, pre-holiday stockpiling sentiment was sluggish; weakened downstream orders and high aluminium prices squeezing profits led to procurement mainly for essential restocking, with no concentrated restocking, thus providing insufficient price drive from demand. Post-holiday production resumptions are expected to be slow, and demand recovery remains to be seen, making rapid volume expansion difficult in the short term. Secondary aluminium alloy prices in February are expected to be in the doldrums at highs, with the price centre pulling back M-o-M.

Aluminium die-casting: 

SMM's survey shows that the Chinese New Year break duration for aluminium die-casting enterprises in 2026 increased slightly by 1–3 days Y-o-Y, with longer shutdowns in South China. Due to high aluminium price fluctuations and year-end payments, enterprises were cautious in procurement and stockpiling, maintaining only a normal production pace without additional raw material or finished product stockpiling. Pre-holiday production relied on long-term contract support. Post-holiday, constrained by high aluminium prices and weakening automotive demand, order recovery is limited, and recovery expectations are subdued. Close attention should be paid to aluminium price trends, guarding against high price pullback risks, and flexibly adjusting procurement pace.

In summary, during the 2026 Chinese New Year period, the five segments of the aluminium industry chain exhibited differentiated operational trends: the plate/sheet, strip and foil segment, supported by leading enterprises, showed notable production resilience and was least affected by the holiday; the aluminium extrusion and aluminium wire and cable segments, bolstered by new energy and ultra-high voltage orders, saw some enterprises maintaining production or delaying breaks, but construction profile and small and medium-sized wire and cable enterprises performed weakly; the secondary aluminium and die-casting segments, affected by aluminium price volatility, weakening demand, and policy controls, experienced extended break durations and subdued resumption expectations. Overall, enterprises were generally cautious in stockpiling, with significant order divergence. All segments hope for demand recovery driven by the post-holiday "Golden March, Silver April" consumption peak season but also face multiple risks such as aluminium price fluctuations, demand falling short of expectations, and weak operating rates. Subsequent focus should be on aluminium price trends, the pace of downstream demand recovery, and the effects of policy implementation. Enterprises should flexibly adjust production, procurement, and stockpiling strategies based on their segment characteristics, actively respond to industry uncertainties, avoid various potential risks, and seize structural opportunities in areas like new energy and ultra-high voltage. 

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.

Image source: https://www.alcircle.com/