In H1 2026, China’s aluminum extrusion industry ran under three clear traits: feeble domestic demand recovery, overseas demand sliding first then bouncing back, and a sharp split between booming and sluggish product segments.

This week, the operating rate of leading aluminum downstream processors in China recorded 61.3%, down 0.6 percentage points WoW.

SMM, July 12: In the first half of 2026, China's aluminum extrusion industry presented an extreme pattern of structural divergence. Traditional construction extrusion demand remained persistently weak, dragging down the industry’s overall operating load, while industrial extrusion maintained high prosperity, underpinned by new energy, power, and heat dissipation sectors, serving as the core pillar of the industry. Meanwhile, linked volatility in aluminum prices intensified both in and outside China, with the price spread repeatedly narrowing. The export market experienced a "deep V-shaped recovery" trajectory, and the overall industry performance was characterized by "weak recovery in domestic demand, initial suppression followed by recovery in overseas demand, and a stark contrast between strong and weak structural segments." 1. Extrusion Operating Rates: Construction Extrusion Continued to Drag, Industrial Extrusion Resilience Supported the Industry After the 2026 Chinese New Year, the industry entered its traditional peak season for resuming work. In March, extrusion enterprises concentrated on production resumptions and downstream clients engaged in concentrated restocking, pushing the industry's composite operating rate to its H1 peak of 50.6%. Entering Q2, genuine downstream demand follow-through was insufficient, raw material prices fluctuated at high levels, and the industry was further impacted by the rainy season in south China and environmental protection inspections in some regions. As a result, the industry operating rate continued to pull back mildly, falling to 47.6% in June, with the overall operating level weaker than the average for the same period over the past three years. Construction extrusion was the core weak spot dragging down the industry’s overall operations. In H1, data on commercial housing transactions and new construction starts in China remained persistently weak; developers' financial positions showed no significant improvement, and payment returns from project sites were slow. Orders for housing construction-related doors, windows, and curtain wall extrusions continued to shrink. From January to May, domestic aluminum prices generally consolidated at highs, and downstream end-users exhibited strong resistance to high-priced raw materials. Traders and processing plants generally maintained low inventory levels, moving goods in and out quickly, with low willingness to initiate restocking. Although the industry actively expanded non-residential construction demand from industrial parks, standard factories, and government and enterprise public buildings, and home decoration for existing home renovations and home decoration retail recovered slightly, the incremental volume was limited, completely failing to offset the decline in bulk project orders. In H1, construction extrusion operations remained under pressure, making it the biggest drag on the industry. The structural prosperity of the industrial extrusion segment continued to rise, strongly underpinning the industry's operating rates. Demand for power transmission and transformation, energy storage structural components, industrial heat dissipation extrusions, and rail transit supporting profiles maintained steady growth. For PV extrusion, affected by the official cancellation of the export tax rebate policy for PV-related products on April 1, overseas clients concentrated on front-loading orders and enterprises rushed to meet production deadlines in Q1, driving the operating rates for PV frames and mounting extrusions to stage a temporary surge. After the policy took effect, the bonus from overseas rush orders faded, and PV extrusion production schedules returned to rationality, maintaining stable operation from April to June. NEV extrusions showed structural divergence: demand for lightweight extrusions for auto body and chassis remained robust, while demand for ordinary interior extrusions weakened. Overall, the resonance of prosperity across multiple industrial extrusion tracks effectively offset the weak demand for traditional construction materials, highlighting the structural resilience of the industry. 2. Aluminum Extrusion Exports: Deeply Under Pressure in Q1, Continuous Recovery in Q2, V-Shaped Reversal in H1 In H1 2026, China's aluminum extrusion exports followed a V-shaped trend overall, with a sharp decline in Q1 followed by consecutive recoveries in Q2. The driving logic shifted from price inversions and off-season effects overseas at the beginning of the year, towards the release of demand in emerging markets and the transfer of China's processing and manufacturing advantages. Q1: Domestic and Overseas Aluminum Price Inversions Combined with Overseas Off-Season Led to Sharply Weaker Exports Exports from January to February showed off-season resilience, mainly supported by deliveries for orders placed ahead of the Chinese New Year. In January, China exported 81,000 mt of aluminum extrusions, up slightly by 1.4% MoM but down slightly by 5.3% YoY. In February, disruptions from the Chinese New Year holiday saw exports fall to 64,000 mt, a 20.4% MoM decrease but a sharp 62% YoY increase, significantly outperforming the precipitous declines of past Chinese New Year periods. The core reason was that secondary aluminum extrusion enterprises in Guangdong and Fujian concentrated on delivering orders for Southeast Asia and the Middle East before the holiday, while some industrial extrusion enterprises adopted a model of "preliminary domestic processing and deep processing overseas" to speed up contract fulfillment, supporting export volumes at the start of the year. In March, industry exports hit their low point for the first half of the year, with monthly exports of only 48,000 mt, down 24.8% MoM and plunging 32.8% YoY. The core reason for this export slump was not a single geopolitical factor but the resonance of multiple negative factors: first, orders placed ahead of the Chinese New Year overdrew demand from February and March, after which overseas markets entered the traditional consumption off-season; second, LME aluminum saw wild swings in March, and domestic and overseas aluminum prices quickly inverted, compressing export profits for domestic extrusions and leading enterprises to proactively control volumes and take fewer orders; third, the European and US CBAM carbon tariff continued to suppress high-end extrusion exports, causing continuous market shrinkage there, coupled with a slowdown in logistics and customs clearance in some Middle Eastern regions. These multiple factors caused a substantial pullback in export volumes in March. Q2: Emerging Market Volume Surge, Exports See Double YoY and MoM Growth for Two Consecutive Months Starting in April, the price spread between China and overseas markets gradually recovered, the overseas off-season ended, and industry exports began a continuous recovery channel. Exports that month were 76,000 mt, surging 56.8% MoM and up 6.9% YoY, returning to the normal range for past years. Trade and logistics order in the Middle East recovered, stockpiling in Southeast Asia ahead of the rainy season began, and domestic enterprises accelerated their layout in emerging markets in Central Asia and Latin America. Leveraging overseas affiliated warehouses and cross-border stockpiling models to continuously take on rigid demand orders for overseas doors, windows, and curtain walls, export prosperity recovered rapidly. Exports in May continued their high-growth momentum, hitting the monthly peak for H1 at 87,000 mt, up 14.6% MoM and 20.1% YoY. The export structure continued to optimize; low-end construction extrusions saw steady incremental growth, while the export share of high-value-added industrial aluminum components, outdoor aluminum semis, and PV supporting extrusions continued to rise. Southeast Asia, Australia, South America, and Central Asia became the four core growth markets for domestic extrusion exports, effectively offsetting the shrinking demand in European and US markets. 3. H2 2026 Industry Outlook: Weakly Stable Domestic Demand, Marginal Export Weakness, Continued Structural Divergence Looking ahead to H2 2026, the structural divergence pattern in China's aluminum extrusion industry is expected to become further entrenched, with overall operations characterized by "consolidation on a subdued note, industrial support, and construction material drag." On the domestic demand side, the fundamentals of the real estate sector are hard-pressed to see a substantive repair in the short term. Commercial housing new starts and project payment returns are expected to remain weak, and construction extrusion demand will continue to operate in a low range without a trending recovery. Non-residential infrastructure and home decoration retail can only provide a slight offset, unable to reverse the overall weakness of construction extrusions. Industrial extrusion will remain the core pillar of the industry: in H2, steady climbing of domestic PV installations will drive the continued release of demand for PV frames and mounting extrusions; demand for new-type energy storage, data center heat dissipation, and power equipment extrusions will maintain steady incremental growth. NEV extrusions will show a divergence between strong and weak segments; demand for high-end lightweight structural components will be firm, but overall industry overcapacity and intensifying end-user competition will exert marginal contraction pressure on demand for ordinary automotive extrusions. Overall, industrial extrusion can defend the industry’s baseline but can hardly offset the downward pressure from construction extrusions. In H2, the industry's overall operating rate may be slightly lower than in H1. Pressure on the export front will gradually emerge, with the trend potentially turning from the high growth of Q2 to a mild slowdown. In H2, the bonus from overseas traditional peak seasons will gradually fade, while the domestic-overseas aluminum price spread narrows, export processing profits are compressed, and overseas local aluminum processing capacity continues to be released, alongside persistent trade barriers against Chinese aluminum semis in some countries. This will gradually weaken the price advantage of domestic extrusion exports. Although secondary aluminum extrusion exports may still hold cost advantages, homogenized competition in low-end products is fierce and profits remain compressed. The export growth rate for aluminum extrusions is expected to slow down gradually in H2, with overall volumes weaker than in Q2. In summary, throughout 2026, the aluminum extrusion industry is expected to continuously exhibit structural characteristics of weak construction, strong industrial, stable but weak domestic demand, and exports that are high in the first half and low in the second. Industry competition will further concentrate on high-end industrial extrusion, high-value-added deep processing, and overseas emerging markets, with low-end construction extrusion capacity continuously entering a phase of being cleared.

[SMM Analysis: Glimmer of Hope amid Weak Supply and Demand: Review of China's Aluminum Billets Market in H1 2026 and Outlook for H2] In H1 2026, China’s aluminum billets market, squeezed by wild swings in aluminum prices and a slow recovery in end-use demand, underwent a turbulent journey from deep pressure to staged repair...

Jul 9, 2026 News: This week, the overall operating rate of industry leaders in China's aluminum processing sector trended lower, edging down 0.7 percentage point WoW to 61.9%, significantly constrained by off-season effects. The operating rate of primary aluminum alloy edged up 0.2 percentage point to 59.6%, as enterprises focused on long-term contract deliveries, maintaining stable operations overall despite cautious procurement due to price fluctuations. The operating rate of aluminum plate/sheet and strip slipped 0.6 percentage point to 69.4%, weighed on by weak demand for general-use plates and the impact on exports from recovering capacity in North America; although the ESS sector provided support, pressure for production cuts persisted. The operating rate of aluminum wire and cable pulled back significantly by 2.4 percentage points to 66.6%, mainly because the export window closed and orders from State Grid fell short of the same period last year, with domestic demand unable to fill the gap. The operating rate of aluminum extrusion dipped 0.6 percentage point to 53.1%, as a sluggish property market led to shrinking orders for architectural extrusions; despite strong performance from industrial extrusions for ESS, the overall weakness was hard to reverse. The operating rate of aluminum foil edged down 0.4 percentage point to 71.4%, dragged down by a sharp drop in air-conditioning production schedules and the off-season for packaging, with only battery foil remaining stable. The operating rate of secondary aluminum fell 0.4 percentage point to 51.4%, constrained by multiple factors including tight tax invoices, high aluminum scrap costs, and weak end-use demand. Overall, most sectors except ESS were under pressure, and the operating rate is expected to maintain its downtrend in the short term. Primary Aluminum Alloy: This week, the operating rate of leading primary aluminum alloy enterprises in China recorded 59.6%, a slight rebound of 0.2 percentage point WoW, with an overall stable operational trend. Supply side, industry leaders primarily focused on long-term contract deliveries at this stage, with no significant adjustments observed in production arrangements and no plans for major production schedule changes; the overall operating level generally followed demand for orders on hand. Demand side, aluminum prices consolidated recently, leading to an increase in market quotation frequency, but actual transactions remained cautious. Given that the market currently operates mainly under a point-price model, price fluctuations significantly impacted sentiment among buyers and sellers. Some downstream players and traders, concerned about potential large price swings ahead, maintained a cautious procurement pace and showed limited willingness for active stockpiling. Overall, order deliveries among leading enterprises were relatively stable, and enterprises lacked significant motivation to raise operating rates. In the short term, the operating rate of leading primary aluminum alloy enterprises is expected to move sideways, likely consolidating near 59.6%. Aluminum plate/sheet and strip: This week, the operating rate of industry leaders in the aluminum plate/sheet and strip sector fell 0.6 percentage points WoW to 69.4%. At the enterprise operations level, industry operating pressure continued to mount. Producers faced the dual challenges of insufficient orders and high finished product inventories, leading to an expansion in voluntary production cuts. In terms of order structure, end-use demand for civilian general-purpose plate remained sluggish, with orders for 1xxx and 3xxx series cast-rolled products declining notably. On the export side, after the leading rolling mill in North America resumed production lines in June, its July orders have been fully reclaimed, which will directly affect China's exports to the US. Domestic can stock and automotive sheet producers that had taken on transferred orders have adjusted their production pace accordingly. The ESS sector maintained growth, with national ESS battery cell production reaching 82 GWh in June and expected to rise 4% MoM in July, providing additional order support for related plate/sheet and strip products such as battery casings and brazing materials. As we enter the mid-to-late July period, the probability that an overall demand recovery will drive up operating rates is low. The operating rate of the aluminum plate/sheet and strip industry is expected to continue consolidating on a weak note. Aluminum wire and cable: This week, the operating rate of China's aluminum wire and cable industry registered 66.6%, down 2.4 percentage points WoW. The operating rate pulled back notably during the week, mainly because the export window for aluminum stranded wire had closed, the backlog of earlier export orders was gradually being fully digested, new order intake was severely insufficient, some enterprises progressively reduced their production loads, and capacity utilization rates dropped significantly. On the domestic front, although the State Grid has been delivering orders successively, top-tier players reported that current orders on hand are smaller in scale than the same period last year, and the increase in new orders is limited, making it difficult to fill the gap left by the ebbing of export orders. Under the dual pressure of fading export dividends and insufficient domestic demand to fill the void, the industry's order structure weakened noticeably, and enterprises' production scheduling enthusiasm declined. Overall, the operating rate of China's aluminum wire and cable industry is expected to remain under pressure and decline further. Aluminum extrusion: This week, the weekly operating rate of China's aluminum extrusion industry registered 53.1%, down 0.6 percentage points WoW, continuing its downward trend. Breaking it down, building aluminum extrusion remained sluggish this week. Affected by the persistently depressed commercial real estate market, orders from end-user door and window dealers shrank notably. Some downstream door and window dealers chose to downsize their stores or even exit the market, leading to a decline in spot purchases for home improvement doors and windows, thereby dragging down the sector's operating rate. In the industrial aluminum extrusion sector, due to the traditional consumption off-season, some small and medium-sized enterprises reported insufficient follow-on orders, and their production schedules continued to decline during the week. However, recently, demand for industrial aluminum extrusion from the energy storage sector has been impressive, with order growth maintaining a positive trend, partially offsetting the decline in industrial extrusion operating rates. Overall, the weak fundamentals of building aluminum extrusion have not improved, while industrial aluminum extrusion is consolidating on a subdued note due to shrinking orders at small and medium-sized enterprises. The operating rate of the aluminum extrusion industry is expected to maintain its downward trend next week. Aluminum Foil: The operating rate of industry-leading aluminum foil enterprises fell 0.4 ppt WoW to 71.4% this week. At the enterprise operation level, the traditional off-season from July to August deepened further, with operating pressure increasing significantly across the sector. In terms of order structure, the air-conditioner foil segment was the main drag — household air conditioner domestic sales production schedules fell 17% YoY in July, and some air-conditioner aluminum foil producers reported that their production schedules were adjusted down 25–30% MoM. For packaging foil, during the traditional off-season from June to August, orders for packaging foil and pharmaceutical foil showed a clear weakening trend, and producers generally prioritized production control and inventory reduction as their primary strategy. The production pace for battery foil remained stable. Overall, under the triple pressure of deep weakness in air-conditioner foil, the packaging off-season effect, and aluminum price fluctuations, the operating rate of aluminum foil is expected to continue its downward trend in the near term. Secondary Aluminum: The operating rate of industry-leading secondary aluminum enterprises fell 0.4 ppt WoW to 51.4% this week, as tight tax invoices and the deepening traditional off-season formed a dual constraint, and production cuts and suspensions among enterprises continued. On the raw material side, affected by insufficient tax invoices and tight circulation of compliant aluminum scrap, procurement costs for aluminum scrap remained high, further squeezing enterprise profit margins. Recently, market attention on using primary aluminum to replace scrap in ADC12 production has increased, but from an actual cost calculation perspective, this approach still lacks economic viability overall. Currently, it serves more as a temporary supplementary measure to alleviate invoice shortages rather than a proactive substitution based on cost advantages. Primary aluminum prices strengthened WoW this week, further eroding the already limited substitution economics, and the scale of primary aluminum substitution in the industry did not expand significantly. On the demand side, the traditional off-season characteristics in July continued to manifest, with insufficient new orders downstream and weak restocking willingness from end-users, keeping purchases mainly need-based. After prices rose early in the week, follow-through on high-price transactions was weak; later in the week, some enterprises reported that orders weakened further compared to earlier, with sluggish transactions continuing, and demand providing limited support for operating rates. Overall, against the backdrop of tax invoice issues being difficult to resolve in the short term and the tight supply of compliant aluminum scrap, pressure on raw material supply security for secondary aluminum enterprises remained significant. If end-use demand remains persistently weak, the industry’s operating rate could face further downward potential.

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.