15/07/2026
This round of aluminum ingot price increase in China is not a short-term speculative move by funds. In the short term, the prices are likely to rise rather than fall.
Overseas Factors
1、Rigid supply shortage due to geopolitics (core external factor)
The Middle East accounts for 9% of global electrolytic aluminum output and serves as a key supplier worldwide. Transportation of raw materials and finished aluminum ingots heavily relies on the Strait of Hormuz. Frequent geopolitical conflicts have created a permanent shortage in global aluminum supply.
2、Constraints on global production capacity and energy
Industrial electricity prices in Europe remain persistently high, forcing local aluminum smelters to operate at low load with no room for output recovery. Indonesia was expected to be the main source of new aluminum capacity, yet delayed power infrastructure has slowed its new projects, leaving it unable to offset production cuts in the Middle East.
Domestic Factors
1、Capped production capacity under regulatory limits
China’s electrolytic aluminum output is strictly regulated by industrial policies and has hit the official capacity ceiling. The industry operating rate exceeds 98%, running at nearly full capacity. There is no flexibility to ramp up production in the short term.
2、Structurally strong demand driven by new energy sectors
Weak demand from real estate and construction is offset by robust consumption across new energy industries. Aluminum demand keeps rising steadily for photovoltaic frames, energy storage enclosures, new energy vehicle lightweight components and ultra-high voltage power grid construction.
3、Tight spot market supply
Social inventories of domestic aluminum ingots keep declining, breaking the seasonal pattern of inventory accumulation in low-demand summer months. Tradable spot aluminum supplies in the market have tightened substantially, pushing up prices.
