SunSirs: The Cost Side Suppressed the Upward Space of Aluminum Prices, and Aluminum Prices May Stabilize First and Then Strengthen in October

Aluminum prices first strengthened and then weakened in September

Aluminum prices initially strengthened in September but then weakened. According to the SunSirs commodity market analysis system, as of September 30, 2025, the average price of aluminum ingots in East China was 20,733.33 RMB/ton, up 0.47% from the average price of 20,636.67 RMB/ton on September 1.

The aluminum price has broken through the 20,000 RMB/ton mark and was at a relatively high level in the past 1-2 years. The price of raw material alumina has fallen from its high level, and the profit per ton of aluminum was in a relatively good position.

Aluminum prices fell in September, primarily due to weakening costs. This trend is likely to continue in October, with prices fluctuating and strengthening. Initially suppressed by import replenishment and wait-and-see demand, prices are expected to gradually rise by mid-month as destocking accelerates and costs rise, shifting the price center further upward compared to September.

October Fundamentals Forecast

Supply Side:

Domestic operating production capacity remains above 44 million tons, approaching the policy ceiling of 45 million tons. No significant new capacity was added in October. Electricity prices for electrolytic aluminum producers in Yunnan Province have officially increased by 0.12 RMB per kWh. From the supply side, although the resumption of electrolytic aluminum production in Yunnan Province is largely complete, with 545,000 tons of the initially planned 565,000 tons already restored, the electricity price increase still has a certain impact on production, and in turn, on the supply of aluminum ingots.

Import shock: The Shanghai-London ratio fell to 7.1, the import window opened, and Rusal imports are expected to increase in October.

Changes in aluminum usage structure: the proportion of direct alloying of molten aluminum has increased to 73.9%, the proportion of aluminum ingot delivery is less than 27%, and the phenomenon of "ingot shortage" in the spot market is prominent.

Demand Side:

New energy vehicles are in the final stages of their peak production and sales season. Xiaomi and Huawei are ramping up sales of new models, each using up to 220kg of aluminum. This is expected to generate over 80,000 tons of incremental demand, significantly boosting aluminum prices and significantly driving demand for cast aluminum alloys.

Home appliances: The "old for new" policy will continue until the end of the year. Although the peak season for domestic air conditioner sales has ended, exports have increased, playing a role in supporting rigid demand, and aluminum profile procurement remains stable.

Power grid: UHV projects have entered their construction peak, and aluminum demand is expected to increase month-on-month in October, providing medium-term support for aluminum prices, and order fulfillment is accelerating.

Real Estate: The year-on-year decline in housing completion area narrowed, and the guaranteed delivery of housing projects drove a rebound in aluminum use in building materials, reducing the drag on aluminum prices and showing a marginal improvement.

Photovoltaic: The decline in installed capacity narrowed compared to the first half of the year. Recovering module exports drove demand for aluminum frames, resulting in a neutral to positive impact on aluminum prices overall, and the gap is gradually closing.

Cost side:

Environmental protection policies in the north restrict the release of production capacity in the roasting process. Domestic centralized maintenance and the commissioning of new production capacity form a hedge. The oversupply pressure may be weaker than previously expected. The alumina support price is running above 2,900 RMB/ton.

Macroeconomic factors:

Macroeconomic policies provide support. Domestic planning expectations are expected to strengthen confidence in infrastructure investment. The Federal Reserve is likely to keep interest rates steady in October. The recovery in risk appetite is positive for non-ferrous metals.

Wait-and-see indicators

1. Weekly aluminum ingot inventory (watch for signs of falling below 600,000 tons);

2. Weekly new energy vehicle production (assess the strength of demand);

3. Guinean bauxite arrivals (track cost changes);

4. Shanghai-London exchange rate and aluminum import margins (assess the impact of imports).

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