[China's Aluminum Inventory Pullback, Multiple Factors in Play, Aluminum Prices Drift Higher] Overall, recently the macro front has improved, the US Fed's near-term hold on rate hikes has eased the marginal constraint on the non-ferrous metals sector, and China's proportion of liquid aluminum continues to rise while aluminum inventory destocking has resumed, together underpinning aluminum prices. However, the continuous rollout of long-term aluminum capacity outside China, weak traditional end-use demand in China during the off-season, and the recent easing of geopolitical tensions in the Middle East are putting some upward pressure on aluminum prices. It is expected that aluminum prices will maintain a trend of consolidating on a strong note.

Rio Tinto-operated Bell Bay Aluminum has been excluded from Australia's AUD 2 billion Green Aluminum Production Credit scheme, increasing pressure on the smelter to secure a long-term power agreement before the end of the year. Bell Bay is Australia's only predominantly renewable-powered primary aluminum smelter, with an annual production capacity of 187,000 tonnes. The facility accounts for around 25% of Tasmania's electricity consumption and exports more than 90% of its aluminum production to Asian markets. Without competitive power pricing and government support, the smelter faces uncertainty over its operations beyond 2026.

As of July 30, China’s aluminum ingot inventory in major consumption areas stood at 953,000 mt. Cumulative destocking from the YTD high of 1.465 million mt in early May has reached 512,000 mt (-35%), with an additional accelerated destocking of 53,000 mt this week, breaking below the 1 million mt threshold as expected. However, the directional divergence between warehouse withdrawals and inventory has raised concerns...

As of July 30, China's major consumption regions reported aluminum ingot inventory of 953,000 mt, having cumulatively destocked 512,000 mt (-35%) from the year's high of 1.465 million mt in early May. Within the week, destocking accelerated further by 53,000 mt, as expected falling below the 1 million mt mark. However, the directional divergence between warehouse withdrawals and inventory drew attention: weekly warehouse withdrawals pulled back to 127,700 mt, losing the advantage of being at a high for the same period in the past four years. The core driving force of this destocking round has shifted from "demand and warehouse withdrawal boost" in June to "supply contraction + slowdown in shipment pace": the proportion of liquid aluminum rose to 78.3% in July, with casting ingot volume down 15.1% YoY; a sharp drop in arrivals in South China pushed Foshan's premium wider by 50 yuan/mt in a single week to 115 yuan/mt; SMM believes...

Recently, the aluminum-based master alloy project with an annual output of 49,000 mt, invested by Sichuan Fengyue New Material Technology Co., Ltd., officially commenced construction in Yuanjiaba Aluminum Industrial Park, Guangyuan Economic and Technological Development Zone. The project has a total investment of 50 million yuan, covers an area of about 24 mu, and will install a 15 mt aluminum melting furnace, a 30 mt aluminum melting furnace, an MJMFX120T fully automatic rotary powder forming press, a 1t power frequency furnace, and other auxiliary equipment. The construction period is from July 2026 to December 2026, lasting 6 months. Upon completion, the project will further improve the aluminum industry chain in the park and support the high-quality development of the aluminum industry in Guangyuan. It was reported that on July 26, Vietnam's first domestically produced aluminum ingot products were officially launched at the Nhon Trach Industrial Park in Lam Dong Province, marking a historic breakthrough for the country’s aluminum smelting industry. This completes the entire industry chain layout encompassing bauxite mining, alumina processing, and aluminum production, laying a solid foundation for enhancing the country's industrial self-sufficiency and advancing the development of high-value-added manufacturing.

SMM July 31 news: According to SMM statistics, China's aluminum production in July 2026 (31 days) increased 1.6% YoY and 3.5% MoM. Domestic demand was weak, and combined with a pullback in export orders for some downstream products, all industry chain segments were under pressure; however, driven by high processing fees for aluminum rod and billet, downstream procurement demand for liquid aluminum rose, pushing the proportion of liquid aluminum output in China higher. The proportion of liquid aluminum in the month rose 1.1 percentage points MoM to 78.3%, slightly exceeding expectations at the start of the month, with core growth coming from strong processing profits for some products, leading to higher-than-expected demand for liquid aluminum. Based on SMM's proportion of liquid aluminum calculations, China's aluminum casting ingot production in July fell 15.1% YoY and 1.4% MoM. Capacity changes: As of month-end July, SMM statistics showed China's existing aluminum capacity was approximately 46.29 million mt, flat MoM. Production forecast: Entering August 2026, the traditional off-season for downstream continues, and demand for most downstream products is expected to further weaken. However, some primary processed material orders are performing well, boosting downstream enterprises' willingness to purchase liquid aluminum directly. Overall, the proportion of liquid aluminum is expected to rise 0.2 percentage points to 78.5%. [Data source statement: All data except public information is processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and not as investment advice.] Data source: SMM