SunSirs: Overview of Aluminum Ingot Fundamentals

Aluminum prices fluctuated sideways in July

Aluminum prices fluctuated sideways in July. According to the SunSirs commodity market analysis system, as of July 31, 2025, the average price of aluminum ingots in East China was 20,596.67 RMB/ton, down 0.91% from the average price of 20,786.67 RMB/ton on July 1.

Fundamentals Overview

1. Supply: Operating at a High Level, Incremental Growth Limited

The operating capacity of electrolytic aluminum was at a high level, with the industry's operating rate approaching 97%. There was very limited room for further improvement. However, weekly operating capacity had still increased slightly, and the overall production was maintained at a high load. There was no obvious sign of contraction on the short-term supply side.

As a core raw material for electrolytic aluminum production, alumina was facing significant oversupply pressure. Spurred by industry profit recovery, alumina production capacity was released to a historical high, domestic production was rebounding, and total inventories were continuing to increase. Although alumina warehouse receipts remained at a low level in the short term, the tightening delivery storage capacity in Xinjiang is expected to ease in August, which will suppress recent speculation. In the long term, the trend of alumina inventory accumulation is relatively clear.

2. Demand: Off-season Impact, Declining Operations

As of July 31, during the traditional off-season for consumption, the operating rates of downstream processing companies had declined, putting overall aluminum production under pressure. Downstream suppliers were less willing to take on high-priced orders.

Looking at specific downstream industries, in the new energy vehicle sector, national new energy passenger vehicle retail sales increased by 15% year-on-year from July 1st to 27th, but decreased by 17% compared to the same period last month, indicating a weakening month-on-month demand trend. In the photovoltaic sector, overall photovoltaic module production schedules in August showed limited month-on-month changes, insufficiently boosting demand for aluminum. Overall, downstream procurement was mainly based on demand, and aluminum ingot spot transactions were generally mediocre, putting pressure on spot premiums and discounts.

3. Inventory: Short-term rebound, year-on-year lower

At the beginning of the week, social electrolytic aluminum inventories were 514,000 tons, up 20,000 tons from the previous Thursday, showing a trend of accumulation. Spot aluminum bar inventories were 158,500 tons, down 5,000 tons from the previous week, showing relatively small fluctuations. Overall, despite a short-term rebound, inventories remained relatively low year-on-year, providing some support for aluminum prices.

4. Policy and Market Sentiment: Multiple Factors Intertwined

Domestic policy statements did not exceed expectations, anti-involution sentiment eased somewhat, and the long-term focus on "promoting consumption and stabilizing growth" remained unchanged, providing limited support for market sentiment. Meanwhile, the alumina industry's call for "governing disorderly competition in accordance with the law" exacerbated short-term market volatility.

Overseas, the Federal Reserve remained on hold for five consecutive meetings, with two votes in favor of a rate cut. However, Powell did not provide clear guidance on a September rate cut, emphasizing the uncertainty surrounding tariffs and inflation. He also stated that the job market has not weakened, and that policy uncertainty remains. While the easing of tariffs between China and the United States and the IMF's upward revision of growth forecasts have boosted market optimism in the short term, they are unlikely to offset the pressure from low-season demand in China.

5. Price Forecast and Trading Strategies

Spot aluminum ingot prices are expected to fluctuate at high levels in the short term, supported by low inventory levels. The core fluctuation range is expected to be between 20,400 and 20,900 RMB/ton. In the medium and long term, prices are expected to fluctuate slightly due to low off-season demand and a rebound in aluminum ingot inventories. However, due to relatively low year-on-year inventory levels, downward movement is limited.

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