In H1, the industry showed distinct characteristics: upstream raw material imports experienced a mix of hot and cold trends, while mid-and downstream aluminum processing product exports saw explosive growth. Diverging domestic and overseas demand, shifting overseas manufacturing orders, and changes in the overseas raw material supply landscape are jointly reshaping the trade pattern of China's aluminum industry chain.

[SMM Analysis]Divergent Trends in H1 Unwrought Aluminum Alloy Imports and Exports: Price Spreads Boost Exports While Inverted Profits Drag Down Imports

[SMM Cast Aluminum Alloy Morning Comment: Aluminum Scrap Imports Post Third Straight Monthly Decline in June 2026, Continually Reshaping Aluminum Alloy Trade Patterns] Currently, the secondary aluminum alloy market remains in the off-season, with downstream order releases limited. End-user procurement stays need-based, overall trading activity is relatively subdued, and the demand side provides insufficient support for price increases. Meanwhile, aluminum prices remain...

Customs data show that in June 2026, China's import and export trends for unwrought aluminum alloy (HS 76012000) diverged significantly. The import side remained under pressure, with June imports at 55,100 mt, down 28.9% YoY and 14.7% MoM; H1 cumulative imports totaled 433,500 mt, a YoY decline of 20.0%. The export side performed remarkably well, with June exports at 67,200 mt, surging 160.6% YoY and up 11.7% MoM, setting a new record for China's monthly exports of unwrought aluminum alloy. Exports in January-June totaled 238,500 mt, a YoY rise of 98.3%. Driven by the continuous contraction in imports and rapid growth in exports, trade in unwrought aluminum alloy shifted back to a net export position in June 2026.

The State Council Information Office held a press conference today (14th) to present China's foreign trade performance since the start of this year. It was introduced that in H1, China's foreign trade achieved double-digit growth and maintained a good momentum. With the rapid development of artificial intelligence, imports and exports of related products showed strong momentum. In H1, imports and exports of computing hardware such as electronic components and computer parts totaled 5.13 trillion yuan, up 56.6%. Smart products like AI glasses, AI translators, and mechanical exoskeletons have been quickly iterating, with various innovative products constantly emerging. According to customs statistics, in H1 of this year, China's total goods trade imports and exports reached 25.47 trillion yuan, up 16.9% YoY. Specifically, exports were 14.73 trillion yuan, up 13.4% YoY, maintaining growth for 11 consecutive quarters; imports were 10.74 trillion yuan, up 22.1% YoY, outpacing exports by 8.7 percentage points. In June, imports and exports totaled 4.78 trillion yuan, up 24.2% YoY, maintaining growth for 17 consecutive months. Export side, the product structure further improved. In H1, China's exports of mechanical and electrical products reached 9.36 trillion yuan, up 20.1%, accounting for 63.5% of total exports, up 3.5 percentage points compared to the same period last year. Exports of high-tech products reached 3.26 trillion yuan, up 39%. Import side, in H1, China's import growth outpaced exports by 8.7 percentage points, promoting balanced development of imports and exports. Within this, imports rose for energy and other bulk commodities (3.4%), mechanical and electrical products (28%), and agricultural products (8.6%). Trading partner side, China's diversified markets continued to consolidate. In H1, China's imports and exports to Belt and Road partner countries totaled 12.97 trillion yuan, up 14.8%, accounting for 50.9% of total foreign trade. Imports and exports to neighboring countries reached 9.44 trillion yuan, up 20.6%. Trade with Latin America, Africa, and the EU expanded by 16.2%, 19.6%, and 10.2%, respectively. Business entity side, all types of business entities in China maintained good growth momentum. Imports and exports by private enterprises reached 14.53 trillion yuan, up 17%, accounting for 57% of total foreign trade. Imports and exports by foreign-invested enterprises and state-owned enterprises grew by 17.1% and 16.8%, respectively. Wang Jun, Deputy Commissioner of the General Administration of Customs, introduced at the press conference held by the State Council Information Office: Overall, China's foreign trade achieved remarkable results in H1. Meanwhile, the current external environment remains complex and volatile. The World Bank believes that the global economy is facing pressures from rising energy prices, intensifying inflationary pressure, and expectations of monetary policy tightening, leading to a weakening growth outlook. IMF forecast data shows that world economic growth is expected to slow from 3.5% last year to 3% this year, and the growth rate of goods and services trade volume is also expected to slow from 5% last year to 3.5% this year. In H2, China’s foreign trade will face some pressure, but with strong innovation momentum, robust market vitality, and a high level of openness, the fundamentals of foreign trade will remain solid, and the positive momentum in foreign trade development is expected to continue. Based on data released by the General Administration of Customs, SMM compiled the import and export situation of selected products in the metals industry, as follows: Exports: Rare earth exports in June 2026 5,104.8 mt, down 34.1% YoY vs June 2025 . Cumulative exports from January to June 2026 30,482.8 mt, down 6.4% YoY vs January to June 2025. Steel exports in June 2026 10.32 million mt, up 6.6% YoY vs June 2025 . Cumulative exports from January to June 2026 5,487.4 mt, YoY down 5.6 % vs January to June 2025. Unwrought aluminum and aluminum semis exports in June 2026 711,000 mt, up 45.4% YoY vs June 2025 . Cumulative exports from January to June 2026 3.396 million mt, up 16.3% YoY vs January to June 2025. Imports: Iron ore and concentrates imports in June 2026 112.689 million mt, up 6.4% YoY vs June 2025 . Cumulative imports from January to June 2026 628.868 million mt, up 6.3% YoY vs January to June 2025. Copper ore and concentrates imports in June 2026 2.335 10kt, down 0.6% YoY vs June 2025 . Cumulative imports from January to June 2026 14.609 10kt, down 0.9% YoY vs January to June 2025 . Coal and lignite imports in June 2026 42.779 10kt, up 29.5% YoY vs June 2025 . Cumulative imports from January to June 2026 225.4 million mt, up 1.7% YoY vs January to June 2025 . In June 2026, rare earth imports reached 6,261.5 mt, down 25.3% YoY from June 2025 . In January-June 2026, cumulative imports totaled 53,886.6 mt, down 6.1% YoY from January-June 2025. In June 2026, steel imports reached 441,000 mt, down 6.2% YoY from June 2025. In January-June 2026, cumulative imports totaled 2.696 million mt, down 11.3% YoY from January-June 2025. In June 2026, imports of unwrought copper and copper semis reached 478,000 mt, up 3% YoY from June 2025 . In January-June 2026, cumulative imports totaled 2.491 million mt, down 5.3 % YoY from January-June 2025.

[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.

According to the latest data released by the General Administration of Customs on July 14, China's imports of copper ore and concentrates in June were 2.3348 million mt, with cumulative imports for January-June reaching 14.6092 million mt, down 0.9% YoY; imports of unwrought copper and copper semis in June were 478,300 mt, with cumulative January-June imports at 2.491 million mt, down 5.3% YoY. On the export side, China's exports of unwrought aluminum and aluminum semis in June were 710,900 mt, with cumulative exports for January-June at 3.3964 million mt, up 16.3% YoY. Detailed data are as follows (unit: 100 million yuan): Item Unit June Jan-Jun Cumulative Jan-Jun 2025 Cumulative Cumulative YoY Change % Volume Value Volume Value Volume Value Volume Value Import Copper Ore and Concentrates 10kt 233.48 583.22 1460.92 3671.25 1473.51 2778.43 -0.90 32.10 Unwrought Copper and Copper Semis 10kt 47.83 457.33 249.10 2299.07 262.93 1842.99 -5.30 24.70 Export Unwrought Aluminum and Aluminum Semis 10kt 71.09 201.81 339.64 935.41 292.08 728.95 16.30 28.30 Note: "Flash" data are preliminary monthly summary statistics from customs and are subject to the official monthly data after correcting errors in the original statistical raw data. (Wenhua Comprehensive)

In H1 2026, Shanghai aluminum prices followed a high-first-then-low trajectory. In Q1, a mix of market expectations for Federal Reserve rate cuts and geopolitical tensions in the Middle East drove aluminum prices to multi-year highs. Entering Q2, confirmation of the US strong-dollar policy stance, easing supply disruptions in the Middle East, and a seasonal lull in domestic downstream consumption combined to push the aluminum price center downward continuously. Looking ahead to H2, persistent strong US dollar sentiment and overseas liquidity concerns will cap non-ferrous metal valuations. On the supply side, elevated aluminum prices have incentivized higher production releases; domestic operating capacity is projected to rise month-on-month, while newly commissioned capacity in the Middle East and Indonesia will ramp up output gradually. On the demand side, domestic consumption recovery is set to remain modest. Existing export order backlogs will still prop up aluminum semi-finished product shipments, yet market expectations for new export orders have softened. All told, Shanghai aluminum’s price center is likely to slide further in H2, delivering a full-year high-first-then-low price pattern. 1. H1 2026 Shanghai Aluminum Price Review by Stage 1.1 Q1: Macroeconomics & Geopolitics Dominate, Aluminum Prices Surge Then Consolidate Shanghai aluminum prices in Q1 2026 were primarily dictated by macro sentiment and overseas supply disruptions, with seasonally weak fundamentals taking a backseat. January: Rate Cut Expectations & Capital Inflows Fuel Price Rally Fundamentals: A seasonal lull ahead of the Lunar New Year created demand weakness, leading to a continuous build-up of social aluminum ingot inventories. By late January, SMM-tracked social inventories hit 782,000 tonnes, the highest level for the period in three years. Sustained high aluminum margins squeezed profit margins for downstream processors, dampening their willingness to operate and curbing primary aluminum purchasing activity. Macroeconomics: Markets priced in an impending Fed rate-cut cycle, sending the US Dollar Index sharply lower and drawing heavy speculative capital into commodity futures. Complementary pro-consumption policies rolled out domestically further underpinned aluminum prices. SMM’s average A00 aluminum price stood at RMB 24,086/tonne in January, the highest monthly average in H1. February: Cooling Rate-Cut Hopes Trigger Range-Bound Weakness Fundamentals: Lunar New Year holidays triggered a sharp collapse in downstream procurement, while smelters ramped up ingot casting, pushing social inventories even higher. Post-holiday SMM social inventories climbed to 1.108 million tonnes, with bloated stock levels failing to provide upward price support. Macroeconomics: Dimming Fed rate-cut bets lifted the US Dollar Index, prompting profit-taking liquidation that dragged aluminum prices lower and locked the market into weak consolidation. The average SMM A00 aluminum price retreated to RMB 23,385/tonne in February, down roughly RMB 700 month-on-month. March: Alternating Middle East Supply Risks & Demand Drags Intensify Volatility March trading centered on alternating forces of Middle East supply disruptions and demand-side headwinds, amplifying long-short volatility and driving aluminum prices through a pattern of rally-correction-rebound. Supply-side developments saw widespread overseas production curtailments: Mozal entered maintenance; Qatalum maintained a 60% operating rate and ruled out further output reductions; Alba shut down Lines 1, 2 and 3 with additional cutbacks rumoured; major damage to EGA facilities stoked fears of large-scale production suspensions. SMM estimates tally nearly 4 million tonnes of overseas primary aluminum capacity subject to cuts, including Mozambique’s smelter. Worries over contracting overseas supply became the core catalyst for periodic price rallies. Geopolitical risks: Escalating conflict in the Middle East raised widespread market concerns over shipping security in the Strait of Hormuz, embedding persistent geopolitical risk premiums into aluminum valuations. Demand-side headwinds: Mounting stagflation fears lifted risk aversion; lofty aluminum prices deterred downstream buying, while surging energy and freight costs crushed processor profitability and restrained demand recovery. SMM’s average A00 aluminum price rebounded to RMB 24,386/tonne in March, the second-highest monthly average in H1, alongside markedly wider price swings. 1.2 Q2: Expanding Supply & Marginal Demand Weakness Push Price Center Lower In Q2, high aluminum prices lifted domestic capacity utilization, while the market gradually priced in the impacts of overseas smelter cutbacks, shifting focus back to domestic fundamentals. Shanghai aluminum’s average price fell from roughly RMB 24,665/tonne in April to RMB 23,769/tonne in June, with prices dipping to an intra-year low of RMB 22,665/tonne in late June. Supply side: Strong prices encouraged primary aluminum smelters to boost operating rates and lift domestic output. The market gradually absorbed the impact of cutbacks in Mozambique and the Middle East, weakening the Shanghai-LME aluminum price ratio. Between June and July, rumours circulated that curtailed Middle East capacity would resume production, coupled with sequential commissioning of new Indonesian smelters, amplifying expectations of rising overseas supply. Industry communications indicate domestic primary aluminum output rose approximately 3.5% year-on-year over the first five months. Demand side: Elevated aluminum prices weighed on domestic end-user consumption, yet a stronger LME premium relative to Shanghai aluminum boosted semi-finished aluminum exports, offsetting weak domestic primary aluminum offtake. General Administration of Customs data records cumulative exports of unwrought aluminum and semi-finished products at 2.685 million tonnes in Jan-May, up 10.4% YoY. April single-month exports hit 598,000 tonnes, a one-year-plus high, followed by May shipments of 632,000 tonnes, up 15.5% YoY. Robust export volumes effectively filled the gap left by muted domestic consumption. Inventory side: Q2 delivered a pronounced destocking cycle. Social inventories peaked at 1.465 million tonnes in early May before falling to 1.165 million tonnes by end-June, a total drawdown of around 300,000 tonnes with an accelerated destocking pace. Weekly inventory drawdowns once surged to 170,000 tonnes, a four-year high for single-week de-stocking volumes. 2. Fundamental Supply & Demand Analysis 2.1 Supply: High Smelting Margins Boost Operating Rates, New Capacity Ramp-Ups Keep H1 Supply Ample Persistently robust smelting profitability in H1 2026 significantly expanded production flexibility, acting as the core driver of loose supply conditions through the first half. On one hand, sustained aluminum price strength maintained healthy per-tonne margins, maximizing smelters’ production incentives. On the other hand, new projects commissioned from late 2025 through H1 2026 entered sequential ramp-up phases, delivering steady monthly output increments. Continuous volume growth from newly commissioned capacity further lifted domestic primary aluminum production. The combined effects drove steady gains in national primary aluminum output, resulting in abundant raw material supply across the market. 2.2 Demand: Muted Domestic Consumption, Exports Act as Key Support Domestic primary aluminum demand in H1 2026 displayed a clear divergence: soft domestic offtake offset by buoyant external demand. Persistently high aluminum prices suppressed downstream purchasing, yet semi-finished aluminum exports benefited from favourable cross-market price differentials and delivered standout performance. General Administration of Customs data shows China exported 1.435 million tonnes of aluminum semi-finished products in Jan-May 2026, up 13.7% YoY, with May single-month exports reaching 320,000 tonnes (+14.7% YoY). Elevated export volumes over the first five months created a vital outlet for domestic primary aluminum digestions. The core driver behind export strength was the LME-over-Shanghai price spread: overseas markets faced tight supply expectations stemming from Middle East production cuts, while bloated domestic inventories depressed Shanghai aluminum, creating lucrative profit windows for semi-finished aluminum exporters. 2.3 Inventories: H1 Inventory Build to Multi-Year Highs Followed by Rapid Q2 Destocking Domestic social primary aluminum inventories traversed three distinct phases in H1 2026: rapid accumulation, consolidation at elevated levels, then steep destocking. Early-year seasonal weakness ahead of the Lunar New Year combined with high aluminum prices curbing demand drove continuous inventory builds, which peaked at a multi-year high of 1.465 million tonnes in early May. Subsequent downstream post-holiday restocking and surging export shipments triggered accelerated inventory drawdowns through Q2. The sharp destocking rate stemmed from concentrated export deliveries paired with a wave of downstream replenishment demand. 3. H2 2026 Outlook 3.1 Macroeconomics: Strong US Dollar Caps Metal Valuations The US will maintain its strong-dollar policy stance, keeping the US Dollar Index elevated and capping valuation upside across non-ferrous metals. Middle Eastern geopolitical risk premiums will gradually fade amid improved shipping outlook for the Strait of Hormuz and easing overseas liquidity jitters, creating long-term bearish pressure on aluminum prices. 3.2 Supply: Overseas Capacity Resumptions & New Commissioning Run Parallel Overseas market developments include incremental production restarts across Middle Eastern smelters, alongside faster ramp-up schedules for newly commissioned overseas capacity. 3.3 Demand: Weakening Support from Export Orders Short-term backlogged orders will continue to underpin semi-finished aluminum export volumes, yet narrowing cross-market price spreads have softened market expectations for new export order intake, pointing to downside risks for export growth over the medium-to-long term. Market participants will closely monitor domestic seasonal peak consumption trends and overseas new order placement momentum. 4. Comprehensive Market Assessment All factors considered, the Shanghai aluminum market will face dual headwinds of macro valuation pressure and expanding supply volumes throughout H2 2026.

[SMM Analysis: 2026 H1 Review and H2 Outlook for Secondary Aluminum Alloy: Resilience Remains, Hidden Concerns Persist] Looking ahead to H2 2026, the secondary aluminum alloy market is expected to continue operating around two main themes: "cost support" and "demand recovery," maintaining an overall pattern of high costs and tight balance.