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.

[Downstream Off-Season Demand Remains Weak, Geopolitical Conflicts Support Aluminum Price Consolidation] Overall assessments indicate that the situation in the Middle East remains volatile, market concerns over interest rate hikes persist, and supply continues to recover. However, the destocking pattern is hard to reverse in the short term. Amid the tug-of-war between longs and shorts, aluminum prices are expected to consolidate and adjust in the near term. Going forward, close attention should be paid to the progress of production resumptions in the Middle East and the trend of geopolitical conflicts, LME aluminum ingot inventory changes, as well as China's downstream processing orders and aluminum semis exports data.

SMM, July 16: PV Aluminum Extrusion: This week, the operating rate of the surveyed industry sample of PV frame enterprises held up well. Leading extrusion manufacturers continued to run at full capacity, supported by ample long-term orders on hand, with the core driver being the advancement of centralized PV projects toward year-end. In H2, the production schedule situation for downstream leading module enterprises is expected to be better than H1, but monthly incremental growth in PV frame demand will steady MoM, limiting the extent of demand improvement. SMM also learned that PV frame processing fees remained stable recently without notable changes. On balance, the operating rate of PV frame enterprises will likely maintain a consolidating-to-firm pattern in the near term. Raw Material Prices: During the period (July 13-July 16, 2026), the SMM A00 weekly average price was 23,155 yuan/mt, up 0.9% from the prior week. Overall, recurring Middle East tensions, lingering rate hike concerns, and continued supply recovery clashed with a destocking trend that is hard to reverse in the short term. Amid this tug-of-war between longs and shorts, aluminum prices are expected to consolidate in the near term. The most-traded SHFE aluminum contract is expected to trade in a range of 22,500-23,500 yuan/mt next week, while LME aluminum is expected to trade at $3,050-$3,250/mt. Looking ahead, close attention should be paid to Middle East production resumption progress and geopolitical conflict trajectory, LME aluminum ingot inventory changes, and China’s downstream processing orders and aluminum semis export data.

[Aluminum Scrap and Secondary Aluminum Weekly Review: Secondary Aluminum Market Moved Sideways, Off-Season Supply-Demand Weakness Pattern Continued] This week, aluminum scrap prices moved sideways overall. On July 16, SMM A00 spot aluminum prices closed at 23,170 yuan/mt, rebounding 220 yuan/mt from last Thursday. Regarding the price difference, on July 16, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 1,972 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 658 yuan/mt, still at extremely low levels.

[Geopolitical Conflicts Combined with Rate Hike Slowdown: Aluminum Prices Consolidate on a Strong Note, Encountering Upside Resistance] In a comprehensive assessment, aluminum prices will maintain a pattern of consolidating on a strong note while encountering resistance in the short term.

[Geopolitical Conflicts and Cooling Inflation Keep Aluminum Prices Biased Stronger, Upside Room Limited] Overall, short-term aluminum prices will consolidate on a strong note and encounter resistance.

[Geopolitical Conflicts and Cooling Inflation Keep Aluminum Prices Biased Stronger, Upside Room Limited] Overall, short-term aluminum prices will consolidate on a strong note and encounter resistance.

SMM, July 14: Today, SMM A00 spot aluminum prices closed at 23,270 yuan/mt, up 270 yuan/mt from the previous trading day. The aluminum scrap market broadly followed with gains of 150-200 yuan/mt. Regarding price spread between A00 aluminum and scrap: on July 15, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan recorded 2,072 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 758 yuan/mt. Supply-side constraints continued to intensify, and the impact of the reverse invoicing policy further deepened. News emerged from Shandong about suspending reverse invoicing starting July, while production cuts and suspensions among small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei and other places were spreading. The scarcity of compliant, invoiced aluminum scrap further increased. On the import front, the scarcity of high-quality overseas supply caused by the earlier inversion of price spreads between Chinese and overseas markets, along with a 1-3 month shipping lag, kept port arrivals low from June to August. Meanwhile, the UAE's aluminum scrap export ban and the EU's tariff hike further intensified the contraction effect on overseas aluminum scrap supply. This week, the aluminum scrap market is expected to continue a sideways rangebound pattern, weighed by demand and supported by costs. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is around 19,900-20,500 yuan/mt. The pullback in spot primary aluminum prices limited further narrowing of the price spread between A00 aluminum and scrap, the cost advantage of aluminum scrap over primary aluminum is unlikely to disappear in the short term, and demand-side support for scrap prices remains. If aluminum prices continue to decline, the substitution effect of primary aluminum for scrap will accelerate.

[SMM Cast Aluminum Alloy Morning Comment: High Aluminum Scrap Costs Underpin, Downstream Trading Sluggish, Market Consolidating] Yesterday, the overall quotation of the ADC12 market showed an upward trend. The SMM ADC12 price rose by 100 yuan/mt from the previous day to 23,800 yuan/mt. As aluminum prices and aluminum alloy futures rebounded, market sentiment recovered somewhat, and enterprises’ willingness to follow the upward trend clearly strengthened. Meanwhile, aluminum scrap procurement costs remained at a relatively high level, and the cost side continued to support ADC12 prices, prompting enterprises to actively push up quotations. However, from the demand side, the improvement in downstream procurement sentiment was limited. End-user orders remained mediocre, and market transactions were dominated by just-in-time procurement. Actual transactions after the price increase still need further verification. In the short term, ADC12 prices continue to move sideways.