The weekly operating rate of leading domestic aluminium downstream processing enterprises fell 0.6 percentage points W-o-W to 60.8 per cent. Due to weak orders, environmental protection-related controls, and high aluminium prices, downstream operations further deepened into the off-season. By sector, the operating rate of primary aluminium alloy pulled back 0.4 percentage points to 59.6 per cent. Long-term contract deliveries at mainstream enterprises remained stable, but persistently high aluminium prices continued to suppress spot order transactions, with downstream purchase willingness remaining sluggish. The operating rate of aluminium wire and cable declined 0.6 percentage points to 60.6 per cent, as environmental protection-related controls in Henan affected enterprise operating capacity, and power grid order matching progressed slowly, keeping operations weak. The operating rate of aluminium extrusion edged down 0.6 percentage points to 51.0 per cent. Construction profiles remained sluggish due to slowed winter construction and payment collection pressures, while reduced PV production schedules dragged on industrial profiles; only automotive and ESS profiles remained basically stable. The operating rate of aluminium plate/sheet and strip dropped 1.0 percentage point to 64.0 per cent, as intensified environmental protection-driven production restrictions in Henan, combined with high aluminium price suppression, led to a significant decline in construction and packaging orders, and expectations of can stock processing fee increases failed to alter the weak pattern. The operating rate of aluminium foil decreased 1.1 percentage points M-o-M to 69.3 per cent, with traditional air-conditioner foil and decorative foil demand weakening, while single-zero packaging foil was supported by year-end stockpiling; new energy products like battery foil saw limited incremental growth. The operating rate of secondary aluminium producers rebounded 1.0 percentage point to 60.8 per cent, mainly driven by the lifting of environmental protection-related controls in Chongqing, but small and medium-sized producers were constrained by high aluminium scrap costs and pressure from die-casting plant production cuts, limiting capacity release. SMM expects industry operating rates to continue weak consolidation in the short term, with further downside room as the consumption off-season deepens, environmental protection constraints remain rigid, and high aluminium prices persist.
Image for referential purposes only
Primary aluminium alloy: The industry operating rate this week was approximately 59.6 per cent, down 0.4 percentage points W-o-W, showing a slight downward trend overall. Supply side, long-term contract deliveries remained stable, maintaining the original pace without significant fluctuations. However, spot order transaction volume shrank, leading to a further decline in the overall operating rate. Demand side, market buying sentiment was generally low, primarily because recent aluminium prices remained high, suppressing downstream enterprises' purchase willingness. Most enterprises currently prefer to wait-and-see, generally believing aluminium prices are still in a high range, and thus are not in a hurry to increase purchases of primary aluminium alloy, showing a clear cautious mindset. Overall, the market is expected to continue its current slow downward trend next week, with subsequent changes needing close attention to the impact of aluminium price fluctuations. Aluminium plate/sheet and strip: The operating rate for leading enterprises in the aluminium plate/sheet and strip sector fell 1 percentage point W-o-W to 64.0 per cent, indicating increasing operational pressure. Environmental protection-driven production restrictions escalated sharply in central China, with Gongyi issuing a red alert for air pollution starting at 12:00 on December 24, expected to last until December 28. Combined with existing environmental protection-related controls in Luoyang and Sanmenxia, production and transportation faced significant constraints, making it difficult for operating conditions to improve before the New Year's Day holiday. Some enterprises, facing continuous order declines, planned to slow down their production pace and conduct concentrated equipment maintenance. On the export front, customs data showed aluminium plate/sheet and strip exports reached 272,100 tonnes in November, up 13 per cent M-o-M, indicating a temporary recovery. Looking ahead to next week, with the consumption off-season deepening, rigid environmental constraints and high aluminium price risks coexisting, and coupled with the later timing of the 2026 Chinese New Year holiday, order books lack effective support. The operating rate for aluminium plate/sheet and strip is expected to remain low in the short term, with little chance for substantial improvement.
Aluminium wire and cable: The weekly operating rate for the aluminium wire and cable industry fell further to 60.6 per cent this week, continuing its downward fluctuation. The decline was mainly due to intensified environmental protection-related controls in Gongyi, Henan, which restricted local producers' capacity, coupled with slow progress in matching power grid orders by year-end, resulting in insufficient actual support. From an operational perspective, some producers have turned to exports as a primary order source, but overseas new energy project progress slowed due to the Christmas holiday, putting short-term pressure on export orders. Meanwhile, although power grid tenders advanced, new tender orders have not entered the cargo pick-up cycle, sustaining a pattern of "strong expectations versus weak reality." Concerns among enterprises about next year's goods pick-up pace persist. Looking ahead to next week, with ongoing environmental production restrictions, slow order matching, and weak year-end stockpiling willingness, the aluminium wire and cable operating rate is expected to remain under pressure and continue its decline.
Aluminium extrusion: The domestic aluminium extrusion operating rate pulled back 0.6 percentage points W-o-W to 51 per cent, primarily due to lower operating rates at some sample enterprises in east and central China. In the architectural extrusion segment, typical year-end off-season characteristics were pronounced. On one hand, lower temperatures led to work stoppages and production cuts at construction projects; on the other, rising pressure for year-end payments made downstream customers more cautious in their purchasing decisions. Consequently, enterprises in Shandong, Zhejiang, and Hunan experienced varying degrees of decline in their operating rates. Among them, large and medium-sized enterprises maintained relatively stable operating rates by compensating for reduced architectural extrusion orders with industrial extrusion business, whereas small enterprises showed relatively sluggish performance. For industrial extrusions, overall performance, though better than architectural extrusions, was constrained by high aluminium prices, leading downstream purchases to focus on rigid demand and orders to become smaller in size, keeping extrusion enterprises' operating costs high. Additionally, some enterprises in Shandong reported that orders related to the power sector involved long payment cycles, resulting in high capital costs and generally weak expectations for future operating rates. Overall, the aluminium extrusion industry is currently in an off-season cycle, lacking upward drivers for its operating rate, which is expected to remain in the doldrums in the short term. Aluminium foil: This week, the operating rate of leading aluminium foil enterprises dropped 1.1 percentage points M-o-M to 69.3 per cent. In terms of order structure, traditional consumption sectors showed significant weakness. Entering late December, order fulfilment for new energy-related products such as battery foil and brazing sheet was relatively high, leading to adjustments in the production pace. On the export side, customs data showed aluminium foil exports in November reached 109,800 tonnes, up 4 per cent M-o-M, primarily boosted by overseas stockpiling demand ahead of Thanksgiving and Christmas. In the short term, the weakness in traditional consumption sectors is hard to reverse, risks of high aluminium prices persist, and order support remains insufficient. Coupled with the delayed stockpiling period for the 2026 Chinese New Year shifting to mid-January, the industry overall lacks strong growth drivers in demand. The operating rate in the aluminium foil sector is expected to fluctuate rangebound.
Secondary aluminium: This week, the operating rate of leading secondary aluminium enterprises rebounded 1.0 percentage point M-o-M to 60.8 per cent, mainly benefiting from the lifting of environmental protection-related controls in Chongqing, where the operating rate of sampled local enterprises has returned to normal levels. However, regions such as Henan and Hebei still face impacts from fluctuations in environmental protection policy, continuously restricting capacity release. Cost side, driven by stronger aluminium prices and record-high copper prices, aluminium scrap prices (especially aluminium tense scrap) rose rapidly and showed strong resistance to declines even during aluminium price pullbacks, keeping production costs for secondary aluminium enterprises high. Currently, some enterprises saw dampened production enthusiasm due to tight aluminium scrap supply and losses, leading to a slight drop in overall industry production. Combined with prices fluctuating at highs and seasonal off-season demand, downstream purchase willingness weakened, and demand-side support for the operating rate was insufficient. Considering the approaching New Year holiday, the operating rate of secondary aluminium enterprises is expected to drop back slightly next week.
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.
Responses
