Aluminum prices stopped falling and rebounded in July
In July 2026, domestic aluminum ingot prices trended upward. According to the SunSirs commodity market analysis system, as of July 22, 2026, the average market price of aluminum ingots in East China stood at 23,186.67 RMB/ton, marking a 4.12% increase from the average price of 22,270 RMB/ton on July 1.
The reasons why aluminum prices stopped falling and rebounded in July are broadly as follows:
1. Improving macroeconomic outlook:
Weaker-than-expected US employment and inflation data have cooled market expectations for interest rate hikes and weakened the US dollar. This has triggered a recovery in US dollar-denominated industrial metals, with a rebound driven by the unwinding of concentrated short positions.
2. Significant inventory drawdown:
Domestic inventories have continued to decline sharply despite the traditional off-season, while LME aluminum stocks have fallen to multi-year lows. Tight supply in the spot market has solidified the price floor.
3. Supply-side constraints:
Domestic electrolytic aluminum capacity is capped at 45 million tonnes, with operating rates near full capacity; the restart of Middle East smelters is sluggish, and production cuts persist in Europe and the US due to high electricity prices, resulting in limited global supply growth.
4. Demand resilience exceeding expectations:
Rising aluminum product exports and steady demand from UHV (Ultra-High Voltage) projects, photovoltaics, and lightweighting for new energy vehicles have offset the drag from the off-season for traditional profiles, while downstream buyers are restocking at lower price levels.
5. Rebound following an oversold slump:
A sharp short-term drop in aluminum prices in late June unleashed significant bearish sentiment, leaving the market severely oversold; subsequent "bottom-fishing" by capital inflows has driven a rebound.
Logic driving aluminum prices in July:
In late June, prices fell due to the dissipation of the Middle East geopolitical risk premium, strong expectations for Federal Reserve rate hikes, the anticipated summer consumption lull, and concentrated short-selling pressure. However, from mid-to-late July, prices rebounded from their lows; this recovery was driven by cooling rate-hike expectations and a weaker US dollar—triggered by softening US economic data—alongside declining domestic and overseas aluminum inventories, a plateau in domestic electrolytic aluminum capacity, and supply rigidity resulting from a mix of overseas production restarts and cutbacks. Demand from emerging sectors like photovoltaics and new energy provided a floor, while downstream buyers restocked at lower price points and short-covering further fueled the rebound. Nevertheless, the upside remained capped by weak demand for traditional real estate profiles during the off-season, as well as concerns regarding future overseas capacity additions and the high-interest-rate environment; overall, the market exhibited a volatile recovery following an oversold condition.
Aluminum Price Outlook:
In the short term, aluminum prices are likely to fluctuate with an upward bias, supported by low inventories, supply rigidity, and expectations of loose macroeconomic policy, though gains will be tempered by the traditional off-season. Demand from the downstream new energy and power grid sectors is expected to enter a peak period in September and October, potentially driving a modest price rise, although the upside remains constrained by new overseas capacity and high interest rates. In the long term, the cap on domestic capacity supports a rise in the price floor, while the release of overseas capacity toward year-end could trigger a pullback; overall, prices are expected to range-trade, with market volatility driven by geopolitical factors, Federal Reserve policies, and shifts in real estate demand requiring close monitoring.
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