The overseas secondary aluminum market shifted from supply-driven gains to demand-led corrections in H1 as geopolitical risks eased and downstream demand remained weak. At the same time, the UAE, the EU and the US introduced measures to strengthen domestic scrap resource management, reinforcing aluminum scrap's strategic role in global supply chains. In H2, SMM expects demand recovery to be the key driver of prices, while policy will continue to shape trade flows and premium scrap availability.

[SMM Analysis: Secondary aluminum operating rate saw a narrower MoM decline but a sharper YoY drop in June]

[SMM Analysis: Secondary Aluminum Operating Rate in June Sees Narrower MoM Decline and Deep YoY Pullback; Attention on Production Flexibility Driven by Price Spreads] According to the SMM survey, in June 2026, the operating rate of the secondary aluminum industry fell 0.9 percentage points MoM from May to 33.3%, and fell 7.6 percentage points YoY.

[Weekly Review of Aluminum Scrap and Secondary Aluminum]Primary-Scrap Spread Narrows Sharply as ADC12-A00 Premium Hits a Record High: Has the Window Opened for Primary Aluminum to Replace Scrap?

While order delivery at industry leaders was relatively stable, the release of new demand was insufficient, and enterprises lacked strong motivation to hike operating rates. Going forward, the operating rate of primary aluminum alloy at industry leaders is expected to stay around current levels, likely moving sideways near 59.6% in the short term.

Analysts remain optimistic on India's leading aluminum producers Hindalco Industries and Vedanta Aluminum, expecting their shares to rise around 20% over the next 9-12 months. Vedanta is projected to benefit from lower production costs, higher output and stronger cash flow, while Hindalco is expected to gain from Novelis' earnings recovery and upstream capacity expansions scheduled for 2028-2029. Although LME aluminum prices have corrected about 17% from recent highs, analysts believe tightening market fundamentals will continue to support prices. Industry estimates suggest the global aluminum deficit for 2026 has widened from 0.3 million tones to 1.5 million tones, providing positive support for aluminum producers.