PV module factory production schedule strengthens, supporting aluminium demand for PV

PV aluminium extrusion: Recently, the PV aluminium extrusion industry has seen a rebound in orders driven by policy support and demand boosts from distributed installations. SMM survey shows that leading enterprises have experienced an increase in order volumes compared to the beginning of the year. By the end of February, some downstream module manufacturers raised their procurement volumes for frames, with distributed projects contributing the main increment.

Demand is expected to further rebound in April-May. However, despite the rising market enthusiasm, the industry's profit margins remain under pressure. With high raw material costs, many enterprises are caught in the dilemma of "volume discount." Currently, top-tier enterprises maintain stable supply through large-scale production, while some small and medium-sized producers have gradually shifted to supporting products like PV mounting blocks to alleviate profitability pressures.

Raw Material Prices: During the period (2025.2.24-2025.02.28), the centre-of-spot aluminium average prices moved upward. The weekly average price of SMM A00 aluminium ingot was RMB 20,532 per tonne, down 0.5 per cent from the previous week's average price. Overall, most suppliers are bullish on the aluminium market outlook, and the inventory turning point is expected to gradually emerge after entering March. With policy support, aluminium ingot inventory is expected to remain low in the long term.

Russia's plan to resume aluminium product exports to the US could help narrow the price spread between domestic and overseas markets. However, the US's inconsistent stance on tariffs has left the market in uncertainty. Trump's erratic "tariff stick" has sparked inflation concerns, while interest rate cut expectations remain unpredictable. As March approaches, the domestic market focuses on the upcoming "Two Sessions," which will set economic growth targets and consumption-boosting policies.

Fundamentals side, cost side support has slightly stabilised. Ahead of the "Golden March and Silver April," downstream operating rates continue their mild post-holiday recovery. It remains to be seen whether end-use consumption can be sustained after entering March.

Currently, most suppliers are bullish on the aluminium market outlook, and the inventory turning point is expected to gradually emerge after entering March. With policy support, aluminium ingot inventory is expected to remain low in the long term. East China has already taken the lead in destocking, and sentiment in the spot market to hold back cargoes has intensified.

SMM believes that driven by macro sentiment and trading expectations, SHFE aluminium is more likely to rise than fall. The possibility of further escalation of tariff issues and macroeconomic stimulus exceeding expectations could push aluminium prices to challenge RMB 21,000 per tonne. The most-traded SHFE aluminium 2504 contract is expected to move between RMB 20,420-21,200 per tonne next week, while LME aluminium is expected to range between USD 2,600-2,730 per tonne.

Source: SMM