Analysts believe that the downside room for the electrolytic aluminum market in the second half of the year is limited, while the upside room requires further observation of macro trends. The main theme of trading geopolitics and the US dollar will continue to run through the second half of the year. Changes in the Middle East geopolitical situation will still strongly disrupt metal prices, and there is still a certain linkage response among the US dollar, crude oil and metals. The comprehensive assessment shows that the pressure on aluminum will be reduced.

In the first half of 2026, driven by multiple factors such as the shift in the macro environment and changes in the global supply pattern, the electrolytic aluminum market showed a strong fluctuating trend, with the price center rising and the profitability of enterprises in the industry generally improving.

On the evening of July 27th, Shenhuo Holdings disclosed its 2026 Interim Report. During the reporting period, the company achieved an operating income of 24.791 billion RMB, a year-on-year increase of 21.35%; and the net profit attributable to parent shareholders was 4.781 billion RMB, a year-on-year increase of 151.06%. The company stated that the double growth in revenue and net profit during the reporting period was mainly due to factors such as the year-on-year increase in the selling prices of coal and electrolytic aluminum products and the year-on-year decrease in the price of alumina, the main raw material, which led to a substantial enhancement of the company's profitability.

The excellent performance of Shenhuo Co., Ltd. is not an isolated case. The performance forecast for the first half of 2026 previously disclosed by Aluminum Corporation of China (Chinalco) showed that the company is expected to achieve a net profit attributable to parent company of 11.2 billion to 12.2 billion RMB during the reporting period, an increase of 58% to 73% year-on-year. Yunnan Aluminum Co., Ltd. also estimated that the net profit attributable to parent company in the first half of 2026 would reach 7.5 billion to 7.8 billion RMB, an increase of 170.98% to 181.82% over the same period of the previous year.

Shenhuo Holdings mentioned in its semi-annual report that in the first half of 2026, electrolytic aluminum showed a physical trend of "surging in the first quarter and fluctuating and retreating in the late second quarter". Driven by multiple positive factors such as overseas geopolitical conflicts disrupting global aluminum supply in the first quarter, the traditional spring consumption peak in traditional downstream sectors and the concentrated commissioning of new energy industry chain capacity, the price center of electrolytic aluminum fluctuated and moved upward; in the second quarter, with the easing of overseas geopolitics and the expectation of aluminum plant resumption, the price of electrolytic aluminum fluctuated and fell back, but still remained at a relatively high level overall.

In the first half of 2026, the average domestic price of electrolytic aluminum stood at 24,139.14 RMB per ton, up 18.84% compared with the average price in the first half of 2025 and 16.49% compared with the average price for the whole year of 2025, hitting historical highs on multiple occasions," said Mi Yanbin, an analyst at Fubao Information. Analyzing the market, he pointed out that in the first half of 2026, geopolitical tensions in the Middle East disrupted the balance of the aluminum market, and tight overseas supply supported the rise in aluminum prices. Relying on cheap natural gas resources, Middle Eastern countries have become the core low-cost production areas and supply pillar of global electrolytic aluminum. In 2025, the global built capacity of electrolytic aluminum was approximately 79 million tons, while the total electrolytic aluminum capacity of the six Middle Eastern countries was about 7.05 million tons, accounting for about 9% of the global total. The transportation of raw materials and finished aluminum products is highly dependent on the Strait of Hormuz, and the smoothness of the waterway directly determines the release of regional production capacity. Geopolitical fluctuations have a direct impact on the global aluminum supply chain.

According to data from the World Bureau of Metal Statistics, the global aluminum market faced a supply shortage of 1.0104 million tons in 2025. In 2026, the contraction of production capacity in the Middle East, coupled with the shutdown and maintenance of Mozal Aluminum's 580,000-ton production capacity, will further tighten overseas effective supply. Meanwhile, the demand for electrolytic aluminum in the market shows a pattern of strong external demand and moderate domestic demand, with aluminum exports performing brilliantly, providing certain support to prices. It is estimated that domestic demand will rise to 22.629 million tons in the first half of the year, an increase of 162,300 tons year-on-year, representing a growth rate of 0.72%.

Regarding the aluminum price trend in the second half of the year, industry analysts and enterprises all hold an optimistic attitude.

Mi Yanbin believes that the downside room of the electrolytic aluminum market in the second half of the year is limited, and the upside room needs further observation of macro trends. The main line of trading geopolitics and the US dollar will continue to run through the second half of the year. Changes in the geopolitical situation in the Middle East will still have a strong disturbance to metal prices, and there is still a certain linkage response between the US dollar, crude oil and metals. The comprehensive assessment shows that the pressure on aluminum will be reduced.

In terms of the industry, on the overseas aluminum supply side, production has been cut by 2.39 million tons to 2.58 million tons due to the impact of the Middle East situation, and the recovery cycle is long. In addition, the new overseas production capacity may fall short of expectations. From a long-term perspective, aluminum prices are prone to rise rather than fall. On the domestic supply side, it is stable with limited new production capacity. Demand continues to face certain pressure, and the improvement in the balance driven by exports will boost the recovery of domestic demand. Under the comprehensive assessment of the reality of macroeconomic and industrial game, it is expected that aluminum prices may rise after fluctuating under pressure in the second half of the year with limited downside space, and the operating range of aluminum prices is expected to be between 22,000 RMB per ton and 25,000 RMB per ton.

Shenhuo Co., Ltd. stated in its semi-annual report that since 2017, the competent authorities have clearly defined the policy control red line for China's total electrolytic aluminum production capacity of 45 million tons. New production capacity can only be implemented through equal or reduced replacement, leading to a significant contraction in the industry's supply elasticity. At present, China's electrolytic aluminum capacity utilization rate has remained at a high level of over 96%, close to the "ceiling" of compliant production capacity. The incremental production capacity in the later stage is very limited, and the rigid constraints on the supply side will form a stable support for aluminum prices for a long time. In the second half of 2026, the supporting policies for the steady growth of China's non-ferrous metal industry are expected to be continuously implemented and take effect. Coupled with the stable support of long-term aluminum demand in the new energy industry, it is expected that the electrolytic aluminum price will maintain a high level of volatility.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.