Metal Trade Show | Aluminium Wire and Cable Industry Sees Modest Recovery Post-New Year

Following the Chinese New Year, the aluminium wire and cable industry has resumed production at a steady pace. This week, the operating rate of leading enterprises reached 53%, marking a 2-percentage point month-on-month (MoM) increase. This improvement is largely attributed to the orderly resumption of operations as planned. However, compared to the 60% operating rate during the same period in 2024, the current rate reflects a year-on-year (YoY) decline of 7 percentage points. The slower recovery in capacity compared to last year is primarily driven by two factors: first, the peak delivery period for the industry has not yet arrived, and second, the volume of pending orders is lower than in 2024, which has directly impacted operational momentum. Nevertheless, the recent Metal Trade Show has injected a certain level of market vitality and potential business opportunities into the sector.

In terms of new orders, the State Grid's ultra-high voltage (UHV) transmission and transformation projects generated over 200,000 metric tons of orders following the holiday. However, there have been no indications of concentrated tenders for overhead line orders related to provincial grids. The pace of order realization for 2025 remains uncertain. Additionally, there were only five UHV tenders in 2024, down from seven in 2023, leading to a decline in the actual UHV orders realized in 2024. This reduction in pending orders has directly contributed to a somewhat weaker operating rate for the aluminium wire and cable industry after the holiday, compared to early 2024.

Despite the sluggish operating rate in the aluminium wire and cable industry, enterprises remain proactive. On one hand, the peak season cycle for this sector differs from other aluminium processing industries. While current downstream demand remains relatively weak, companies are restocking raw material inventories at lower prices to ensure smooth production in the future. On the other hand, companies are also working to increase finished product inventories in preparation for potential "tight delivery" situations. Industry insiders have noted that the delivery peak in the aluminium wire and cable sector can be very tight. Once the intensive delivery phase begins, there is minimal room for surplus finished product inventories. As a result, maintaining operations during the off-season is critical to meeting the annual production targets.

According to data from the National Energy Administration, total investment in power grid projects in 2024 reached 608.3 billion yuan, a 15.2% increase from 527.7 billion yuan in 2023. In 2025, the State Grid is expected to further increase its investment, potentially surpassing 650 billion yuan for the first time, with a focus on UHV projects. In 2024, three UHV projects began construction, and three were put into operation, although the tendering and construction progress was relatively slow. It is anticipated that the tendering process will accelerate in 2025. The State Grid has announced plans for six UHV material tenders in 2025, one more than in 2024, though the specific tender amounts and quantities remain uncertain.

SMM believes the aluminium wire and cable industry is currently experiencing an "order cooling period." While enterprises are gradually scheduling production, the industry still heavily depends on the realization of orders related to power grid construction to meet expectations. The operating rate for the aluminium wire and cable sector is expected to remain subdued in the short term, with potential growth after April, when power grid projects are expected to resume, and the pace of cargo pick-up accelerates.

Source: Al Circle