SunSirs: Aluminum Prices Fluctuated Sideways in July

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.

The fundamental characteristics of aluminum ingots in July were as follows:

Aluminum ingot production capacity first decreased and then increased in July

At the end of June, domestic electrolytic aluminum operating capacity stood at approximately 43.83 million tons. Due to a slight decrease in capacity replacement, the industry's operating rate declined month-over-month, resulting in monthly output of 3.609 million tons, a decrease of approximately 3.2% month-over-month and a year-over-year increase of 1.6%. With the commissioning of replacement projects in Yunnan in July, overall operating capacity remained high. Adjustments to capacity replacement projects in some regions led to a temporary contraction in production in the early stages, but with the gradual implementation of new projects in July, overall capacity supply resumed its growth trajectory. For example, newly commissioned projects in Yunnan gradually released capacity in July, increasing the supply of electrolytic aluminum and exerting potential downward pressure on prices. This dynamic shift in capacity, initially declining but then increasing, was impacting market expectations for aluminum ingot supply.

Impact of excess pressure on upstream core raw material alumina

Alumina, a core raw material for electrolytic aluminum production, faced significant oversupply pressure in the aluminum ingot market in July. Industry profit recovery has driven the release of alumina production capacity to a historical high, leading to a continued rebound in domestic production. This ample supply of alumina has kept electrolytic aluminum production costs relatively stable, with even room for decline, providing some incentive for electrolytic aluminum companies to increase output. Furthermore, the tightening delivery storage capacity in Xinjiang is expected to ease in August. This expectation began to dampen market speculation about alumina and related aluminum products in July, depriving aluminum ingot price increases of support from raw material speculation. Against the backdrop of an alumina oversupply, the increased stability of the aluminum ingot market has further constrained price increases.

Weak downstream demand

July is traditionally the off-season for consumption, and operating rates at downstream processing companies generally declined. Within the aluminum processing industry, weekly operating rates for aluminum processing showed a downward trend, with aluminum sheet and strip being particularly noticeable. During the off-season, weak market demand led to a decrease in orders from downstream companies, and consequently, a decline in aluminum ingot purchases. To control costs and reduce inventory overhangs, companies have increasingly adopted a demand-based purchasing strategy, resulting in mediocre spot aluminum ingot trading and low market activity. Faced with high aluminum prices, downstream companies were significantly less willing to take orders, further weakening market demand for aluminum ingots and exerting a downward pressure on prices.

Demand in key downstream industries was diverging. In the new energy vehicle sector, national new energy passenger vehicle retail sales increased by 15% year-on-year from July 1 to 27, but decreased by 17% compared to the same period last month, indicating weaker month-on-month demand. This indicates that the growth rate of aluminum demand from the new energy vehicle industry slowed in July, failing to provide strong support for aluminum ingot prices. In the photovoltaic sector, overall photovoltaic module production showed limited month-on-month change in August, and its impact on aluminum demand in July was also insufficient. Although the new energy industry is generally developing, seasonal factors and market adjustments during certain periods in July prevented demand for aluminum ingots from driving prices upward. Instead, weak demand growth exacerbated downward pressure on prices.

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