SMM July 10 news: From July 3 to July 9, 2026, the SMM weekly operating rate of secondary lead across four provinces was 30.6%, down 3.27 percentage points WoW. In Anhui, one smelter cut production due to insufficient raw material inventory; meanwhile, another local smelter planned to halt production after depleting its raw material inventory, which significantly boosted output this week. As a result, the regional operating rate increased by about 11 percentage points WoW. In Henan, raw material arrivals at smelters were better than in other regions. Individual smelters ramped up production this week, lifting the regional operating rate slightly. In Jiangsu and Inner Mongolia, smelters cut production due to losses, with their operating rates down by 1 and 8 percentage points, respectively. Looking ahead to next week, attention should be paid to extreme weather and raw material arrivals, as well as the impact of downstream purchasing intensity on lead price trends. Barring special circumstances, the secondary lead operating rate across the four provinces is expected to remain stable with a slight decline.

China's sulphuric acid market remains stagnant at high levels, with intensifying regional divergence [SMM Sulphuric Acid Weekly Review]

[Geopolitical Conflicts and Inventory Destocking Drive SHFE and LME Aluminum to Drift Higher in the Near Term] Overall, Middle East geopolitical conflicts push up risk premiums, combined with the ongoing destocking of China’s aluminum ingot inventory, supporting aluminum prices to hold up well. However, the continuous addition of aluminum capacity outside China and the strong dollar policy pursued by the US will continue to suppress the upside room for aluminum prices, where significant pressure is evident.

[SMM Morning Tin Report: the most-traded SHFE tin contract maintained a sideways trend in the night session, spot tin trading showed mediocre performance]

[Aluminum Scrap and Secondary Aluminum Weekly Review: Cost Support and Off-Season Pressure Coexist, Secondary Aluminum Prices Continue to Move Sideways] This week, the aluminum scrap market continued to see a tug-of-war between cost floor support and weak off-season demand, with prices moving sideways. On July 9, the SMM A00 spot aluminum price closed at around 22,950 yuan/mt. The decline in aluminum scrap prices was consistently smaller than that of primary aluminum, maintaining its resilience.

Capacity side, the domestic alkaline electrolyzer market remained at 43.77 GW, while the PEM electrolyzer market held steady at 2.7 GW, according to incomplete statistics. Haozhen Hydrogen Energy’s brand-new 200 Nm³/h alkaline electrolysis hydrogen production system was officially shipped and delivered, reportedly to the project site of a well-known non-ferrous metal enterprise in China. Project-related developments: Guohua (Ningxia) New Energy Co., Ltd. : The evaluation results for the PC construction general contracting bid candidates of the Guohua Investment Guohua (Ningxia) New Energy Co., Ltd. Solar-Storage-Hybrid Off-Grid Hydrogen Production Key Technology Research and Demonstration Project (Integrated Engineering Hydrogen Production Section) were publicized, with two major chemical construction enterprises shortlisted. The first bid candidate was China Chemical Engineering Second Construction Corporation, with a corresponding bid price of 31.0690374 million yuan; the second bid candidate was China Chemical Engineering Ninth Construction Co., Ltd., with a bid price of 30.3988 million yuan. This demonstration project is located south of the Qingshuiying Hydrogen Production Plant in Ningdong Town, Ningxia, with planned land use of approximately 33 mu. It relies on the existing plant’s utility infrastructure to build a complete set of hybrid hydrogen production units, comprising six hydrogen production process trains: E, F, G, H, I, and J. Among them, Unit E is a 1000 Nm³/h hybrid pilot test facility, situated on the northeast side of the existing Qingshuiying Hydrogen Production Station; Units F, G, H, I, and J are five newly built large-scale hydrogen production systems, each with a rated hydrogen output of 1000 Nm³/h and a maximum long-term safe operating load of 120%, i.e., 1200 Nm³/h. Each new hybrid hydrogen production system adopts an ALK+PEM coupling route, equipped with an 800 Nm³/h alkaline electrolyzer, a 200 Nm³/h proton exchange membrane electrolyzer, and supporting gas-liquid separation equipment, paired with a 1000 Nm³/h integrated purification unit. The output hydrogen purity can reach 99.999%, suitable for PV storage Junrui Green Hydrogen Energy (Shangdu County) Co., Ltd. : The EPC general contracting bid candidates for the Shangdu County 30,000 mt/year hydrogen production project were officially publicized, with three major engineering consortiums shortlisted. The first bid candidate for this project was a consortium led by China Construction Fifth Engineering Bureau East China Construction Co., Ltd., joined by Wuxi Henghe Engineering Consulting Design Co., Ltd., Nuclear Industry (Tianjin) Engineering Survey Institute Co., Ltd., and Jiangsu Industrial Equipment Installation Group Co., Ltd.; the second bid candidate was a consortium led by Anhui Construction Engineering Group No.3 Construction Co., Ltd., joined by Shandong Honghua Construction and Installation Engineering Co., Ltd., Chongqing Chemical Engineering Design and Research Institute Co., Ltd., and Tianjin Huaxing Survey and Design Co., Ltd.; the third bid candidate was a consortium led by China Railway 16th Bureau Group Co., Ltd., joined by Jiangsu Qi’an Construction Group Co., Ltd., Aohua Engineering Technology Co., Ltd., and Hebei Zhongse Huaguan Geotechnical Engineering Co., Ltd. Inner Mongolia Mengqing Pipeline Network Co., Ltd.: The bid candidate announcement for the survey and design of the Inner Mongolia Mengqing Pipeline Network Co., Ltd. Shanghaimiao-Ningdong Green Hydrogen Pipeline Project was released. The top three candidate units for this tender were Sinopec Petroleum Engineering Design Co., Ltd. (10.05 million yuan), China Petroleum Natural Gas Pipeline Engineering Co., Ltd. (10.06 million yuan), and Sinopec Zhongyuan Petroleum Engineering Design Co., Ltd. (10.22 million yuan). This pipeline has a total length of 6.4 kilometers, divided into Inner Mongolia and Ningxia sections, with the Inner Mongolia section being 2.2 km and the Ningxia section being 4.2 km. It has a design pressure of 6.3 MPa and a pipe diameter of DN600, using L360MH steel pipes, with an annual pure hydrogen transmission capacity of 500,000 mt. It is accompanied by two newly built stations: the Shanghaimiao compressor station and the Ningdong terminal station. The project is a demonstration section at the end of the 427 km Dengkou–Shanghaimiao–Ningdong trunk green hydrogen pipeline, spanning Ordos Shanghaimiao Town and Ningxia Ningdong Town. Filing and approval were completed in both locations, and construction is planned to start on September 20, 2026. Ordos Vina Green Energy Logistics Co., Ltd. : The Ordos Vina Green Energy Logistics Co., Ltd. Vina Green Logistics and Hydrogen-Electricity Infrastructure Integrated Hydrogen Production and Refueling Project has been filed, which will further improve supporting infrastructure for local hydrogen logistics. The project is located in the Sanaoliang Industrial Park, Dalad Banner, Ordos City, with a total investment of 63.1638 million yuan. The main construction content includes one 6 mt hydrogen refueling station, one set of 6,000 Nm³/h physical process PSA hydrogen purification equipment, to build an integrated hydrogen production and refueling supporting system. The project construction period is planned from August 2026 to August 2027. Upon completion, it will effectively address the regional hydrogen refueling shortcomings, support the large-scale development of the local green logistics industry, and promote the application of hydrogen energy scenarios. China Energy Construction Bochuang Green Fuel (Shenyang) Co., Ltd. : The Shenyang City Wind and Solar Hydrogen Production Integrated with Biomass Green Alcohol and Oil Demonstration Project Phase I 100,000 mt green methanol EPC general contracting project has announced the candidate winners for the bid. The first candidate is the consortium led by East China Electric Power Design Institute, in combination with Hunan and Liaoning Electric Power Design Institutes, with a bid of approximately 1.7 billion yuan; the second and third candidates are Guangdong Electric Power Design Institute and Zhejiang Electric Power Design Institute, with bids of approximately 1.7239 billion yuan and 1.7883 billion yuan respectively. The project is located in Kangping County, Shenyang. The wind farm site is close to highways and national roads, and the biomass pretreatment plant and the methanol chemical plant are both located within the county. Phase I plans to build 100 MW wind power, 50 MW/100 MWh energy storage, an annual output of 100,000 mt of green methanol, and 360,000 mt of biomass pretreatment supporting facilities. Shaanxi Coal Group Yulin Chemical Co., Ltd. : Shuangliang Hydrogen Energy has won the order for four 3,000 Nm³/h alkaline electrolyzers from Shaanxi Coal Group Yulin Chemical. The order is for the hydrogen production unit supporting the second phase first stage of the Yulin Chemical 15 million mt/year coal grading conversion demonstration project. The supporting hydrogen production unit has a total hydrogen capacity of 12,000 Nm³/h and oxygen capacity of 6,000 Nm³/h, and the unit will serve coal-to-methanol, methanol-to-olefins, and downstream deep processing production. Ordos Vina Green Energy Logistics Co., Ltd.​​​​​​​: The Ordos Vina Green Energy Integrated Hydrogen Production and Refueling Project has been filed. The project total investment is 63.1638 million yuan, using a self-owned fund plus bank loan model, with a construction period of one year, and is expected to be completed and put into use in August 2027. The project is located in the Sanaoliang Industrial Park, Dalad Banner, and is equipped with one 6 mt/day large hydrogen refueling station and one set of 6,000 Nm³/h PSA hydrogen purification unit, relying on by-product hydrogen resources from the park to build green logistics supporting facilities for hydrogen-powered heavy trucks. Hebei Hongmeng Hydrogen Energy Technology Co., Ltd.​​​​​​​: The first Environmental Impact Assessment (EIA) public notice has been issued for the Off-Grid Hydrogen Production Hydrogen Low-Temperature Liquefaction Comprehensive Utilization Demonstration Project. The project is located in Zhangjiakou Kangbao County, in Zhangji Town and Danqinghe Township. The overall total investment is 10.4 billion yuan, with six wind power supply units totaling 1.2 GW installed capacity, of which the main part of the project for hydrogen production and liquefaction investment is 3.49 billion yuan. The project plans to adopt both alkaline and PEM electrolyzers, with a total hydrogen production capacity of 240,000 Nm³/h, an annual output of 140,000 mt of green hydrogen after reaching full production, and simultaneously supporting a 30 mt/day hydrogen liquefaction unit. Supporting infrastructure such as plant buildings, collection lines, and other complete supporting facilities will be constructed simultaneously, to build a wind-solar off-grid hydrogen production and low-temperature liquefaction integrated demonstration base. Policy Review​ 1. The Energy Bureau of Inner Mongolia Autonomous Region has issued a notice regarding the abolition of the Interim Measures for the Administration of Hydrogen Refueling Stations in Inner Mongolia Autonomous Region. In accordance with the requirements of the Notice of the General Office of the Inner Mongolia Autonomous Region People's Government on Conducting the Cleanup of Administrative Normative Documents (Nei Zheng Ban Zi [2025] No. 40) and related requirements, with the consent of the autonomous region people’s government, the Interim Measures for the Administration of Hydrogen Refueling Stations in Inner Mongolia Autonomous Region (Nei Neng You Qi Zi [2022] No. 1461), jointly issued by the autonomous region energy bureau and relevant departments, is hereby abolished. Matters related to hydrogen refueling stations shall be implemented in accordance with the Administrative Measures for the Safety of Renewable Energy Hydrogen Production Industry in Inner Mongolia Autonomous Region (Trial Implementation) and other relevant regulations. 2. The Yunnan Provincial Development and Reform Commission and the Yunnan Provincial Energy Bureau have issued a notice on the 2026 Green Electricity Hydrogen Production Integration Demonstration Project List. According to the project list, there are 8 green electricity hydrogen production integration demonstration projects in Yunnan Province in 2026, with a planned total green hydrogen production of 8,032 mt/year. They are: Yiliang County Green Electricity Hydrogen Production Integration Demonstration Project, Dushupu Service Area Photovoltaic Green Electricity Hydrogen Production Integration Demonstration Project, Songming Service Area Upward Photovoltaic Green Electricity Hydrogen Production Integration Demonstration Project, Qujing High-Tech Zone Huashan Wind-Solar Coupled Hydrogen Production Demonstration Project, Honghe Kaiyuan City Xiehua Green Electricity Hydrogen Production Integration Demonstration Project, Lufeng City Green Electricity Hydrogen Production (Ammonia) Blast Furnace Injection Ironmaking Integration Demonstration Project, Chuxiong High-Tech Zone Wind-Solar Integrated Green Ammonia Synthesis Project, and Shangri-La Green Electricity Hydrogen and Oxygen Production Integration Demonstration Project. Enterprise Updates​​ Weichai Power Co., Ltd. : Weichai Power’s WP15 heavy-duty hydrogen internal combustion engine with direct injection has successfully passed the authoritative environmental protection emission certification test, becoming China’s and the world’s first heavy-duty hydrogen internal combustion engine to complete all core verifications under the China VI regulations. This marks a key breakthrough in the commercialization of zero-carbon heavy-duty equipment in China. The engine model has undergone rigorous testing under all operating conditions, with pollutant emissions significantly better than national standards and carbon dioxide emissions nearly eliminated. Relying on self-developed flexible in-cylinder direct injection core technology, the model achieves ultra-low nitrogen oxide emissions and, combined with a simple after-treatment system, is capable of meeting even higher future environmental protection regulation requirements, with outstanding environmental performance advantages. Baoding Gaoxin Environmental Technology Co., Ltd. : Thirty hydrogen fuel cell sanitation vehicles equipped with Weishi Energy hydrogen power systems were officially delivered to Baoding Gaoxin Environmental Technology Co., Ltd. They will be deployed for road sweeping, washing, watering, and dust reduction operations on major roads in the Baoding Hi-Tech Zone, promoting the green transformation, upgrading, and quality improvement of the local sanitation sector. The delivered vehicles include two main car models—hydrogen-powered water sprinklers and hydrogen-powered sweepers—jointly developed by Weishi Energy in cooperation with Dongfeng Special Vehicle and Changsha Infegreen Environmental. The vehicles are equipped with Weishi Energy’s in-house developed commercial vehicle fuel cell systems and hydrogen storage systems, offering the environmental advantages of zero emissions, no pollution, and low noise. Guoke Green Hydrogen (Dalian) Technology Co., Ltd.​​​​​​​: A research team from the Counselor’s Office of Jiangxi Provincial Government visited Jinpu New District, Dalian City, Liaoning Province, to conduct a special survey on the “New Energy Future Industry – High-Quality Development Vision for Green Hydrogen (Ammonia).” Among the surveyed enterprises, Guoke Green Hydrogen (Dalian) Technology Co., Ltd., as one of the key enterprises, systematically presented its core technology R&D, equipment manufacturing, and industrial application status in green hydrogen, and engaged in in-depth exchanges with the survey team on the development of the green hydrogen industry. Guoneng Hydrogen Innovation Technology (Beijing) Co., Ltd. : Its “Sino-German Hydrogen Energy and Fuel Cell Vehicle Carbon Footprint and Sustainability Assessment Method and System Co-Construction Project” was selected as one of the first batch of typical cases of China-Europe energy cooperation at the 4th China-Europe Energy Technology Innovation Cooperation Forum. Beijing Hypert Hydrogen Energy Technology Co., Ltd.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​: The delivery ceremony for its H49 hydrogen-powered heavy truck was successfully held. The delivered Hypert H49 hydrogen-powered heavy trucks will officially join the Hengnuo Logistics fleet and serve the logistics transportation of finished beverages for Swire Coca-Cola. Huachuang Hydrogen Energy Technology (Guangdong) Co., Ltd. : Foshan’s first hydrogen-powered unmanned vehicle OEM launch conference was successfully held at the Guangdong Cheshijie Automotive Technology Industrial Park in Lecong, Shunde. Huachuang Hydrogen Energy Technology (Guangdong) Co., Ltd. participated as one of the leading enterprises. Chairman Dr. Yang Zhonggao delivered a speech on behalf of the company and completed the signing ceremony. At the event, the OEM’s construction plan, core technology tackling route, and industrialization plan were announced, and a hydrogen-powered unmanned vehicle departure ceremony was held simultaneously. Shaanxi Yanchang Petroleum Materials Group Xi'an Co., Ltd. : For its natural gas subsidiary, it plans to procure proton exchange membrane (PEM) water electrolysis hydrogen production equipment, with a plan to purchase one electrolyzer under a single section. Dongfang Electric (Chengdu) Hydrogen Energy Technology Co., Ltd. ​​​​​​​: Dongfang Hydrogen has successfully signed orders for two sets of 2,000 Nm³/h alkaline electrolyzers, achieving a breakthrough in market orders for large-scale water electrolysis hydrogen production equipment. It is understood that the signed alkaline hydrogen production equipment, equipped with Dongfang Hydrogen’s latest core technologies, will be deployed in a national energy sector hydrogen energy pilot project, supporting the construction of a high-purity hydrogen supply mother station with an annual output of 10,000 mt for fuel cells. After deployment, the equipment can effectively solve the difficulty of hydrogen supply for fuel cell vehicles and break through key bottlenecks in hydrogen energy application. ​​Patent Applications​​ 1. Shanghai Institute of Ceramics, Chinese Academy of Sciences (China) published patent CN2025110028, developing a ceramic-based anion exchange membrane with a laboratory test life of 80,000 hours. ​​2. Johnson Matthey (UK) submitted patent WO2025109876, disclosing a ternary Fe-Ni-Mo non-precious metal catalyst formulation with activity close to platinum-based materials. Technology Footprints/Technical Specifications​​ 1. The team of Tong Lei, Liang Haiwei from USTC and Zhang Liang from Tsinghua University proposed a carbon mesopore depth engineering (CMDE) strategy. Leveraging hollow mesoporous carbon spheres to regulate ionomer penetration depth, they resolved the inherent conflict between kinetic activity and oxygen mass transport in low-platinum fuel cells, and developed a PtCo low-platinum catalyst with anti-poisoning, high mass transport, and excellent durability. They achieved US DOE power, activity, and durability targets at an ultra-low platinum loading of 0.1 mgPt cm⁻². 2. Professor Li Zhipeng’s team at Northwestern Polytechnical University innovatively constructed a three-dimensional multi-physics coupled model for tubular solid oxide fuel cells, systematically revealing the quantitative influence laws of temperature, electrode thickness, porosity, and oxygen domain geometric parameters on cell output performance. 3. The National Hydrogen Energy Power Quality Inspection and Testing Center of China Automotive Engineering Research Institute has built a 0–400 kW hydrogen-involved three-in-one vibration test platform with load and opened it for commercial use, filling the gap in domestic high-power multi-physics coupled hydrogen testing. 4. The high specific power cathode closed-cathode air-cooled fuel cell stack technology developed by the team of Academician Chen Zhongwei and Associate Researcher Zhang Meng at the National Key Laboratory of Energy Catalytic Conversion, Dalian Institute of Chemical Physics, has passed the scientific and technological achievement appraisal organized by the China Petroleum and Chemical Industry Federation. The technology effectively resolves the industry contradiction between water retention and oxygen mass transport in air-cooled fuel cells, solving technical challenges such as low-humidity performance decay, carbon corrosion, dry membrane flooding, and high-power thermal management. 5. Two group standards on water electrolysis hydrogen production have been officially released and implemented: the Safety Technical Specification for Water Electrolysis Hydrogen Production and the Method for Calculating Economic Operation Indicators for Water Electrolysis Hydrogen Production. 6. Petronor and H2SITE collaborate to advance membrane technology for hydrogen production, enhancing high-purity hydrogen and low-carbon efficiency in refining.

In H1 2026, the aluminum scrap market faced the dual pressures of tightening policies and weak demand, which weighed on production growth. Coupled with falling primary aluminum prices, an early indicator of a "high opening, low ending" pattern for the year had already emerged. 1. Price Difference Between Primary Aluminum and Scrap In H1 2026, the primary-scrap price difference went through four phases: starting at lows, rapidly widening, consolidating at highs, and then sharply narrowing, falling to a multi-year low by end-June. Phase 1: The price difference was at a relatively low level at the start of the year, with the Shanghai machinery aluminum tense scrap spread ranging between 2,267 and 2,690 yuan/mt. Before Chinese New Year, downstream enterprises gradually entered their holiday break, terminal restocking willingness was low, and the market was marked by "prices without substantial trading." Phase 2: After the holiday, scrap yards gradually resumed operations. Coupled with the US-Iran geopolitical conflict driving up primary aluminum prices sharply, A00 aluminum prices surged from around 23,100 yuan/mt to 25,590 yuan/mt. Aluminum scrap followed the uptrend but at a slower pace, causing the primary-scrap price difference to widen passively. On March 12, the Shanghai machinery aluminum tense scrap spread hit its H1 peak of 3,848 yuan/mt, while the aluminum extrusion scrap spread reached 3,338 yuan/mt. Phase 3: Primary aluminum prices pulled back from highs. Scrap aluminum, affected by policy compliance requirements, saw tighter supply of invoiced material and thus declined by a smaller margin, allowing the price difference to gradually narrow from elevated levels. Moreover, during the "Golden March and Silver April" peak season, demand fell short of expectations, and downstream scrap utilization enterprises mainly purchased as needed. Phase 4: In late June, A00 aluminum prices accelerated their decline, but scrap aluminum showed resilience due to cost support from the reverse invoicing policy, resulting in a rapid narrowing of the price difference. As of July 7, the Shanghai machinery aluminum tense scrap spread stood at 2,080 yuan/mt, and the aluminum extrusion scrap spread had narrowed to 1,588 yuan/mt. Some cast aluminum alloy producers had already begun to consider substituting A00 aluminum ingots for scrap. 2. Scrap Yard Inventories and Warehouse Withdrawals At the start of the year, after environmental protection-driven production restrictions were lifted in central China, inventories of wrought aluminum scrap approached saturation. However, downstream enterprises had extremely low willingness to stockpile due to high aluminum prices, and some planned to shut down early. The overall domestic scrap market showed resistance to high prices and a "price without market" situation, with scrap yard withdrawals continuing to decline alongside downstream production cuts. Around the Chinese New Year period, scrap yards and scrap utilization enterprises gradually closed for the holiday. Outbound shipments were completely suspended, with only a small amount of delayed arrivals contributing minor inbound volumes, and market trading activity was nearly frozen. After the holiday, as scrap yards fully resumed operations, the release of supply increased somewhat. Downstream restarts accelerated, and restocking demand was slowly released. However, constrained by the reverse invoicing policy, overall trading remained relatively sluggish, with withdrawals dominated by small, need-based orders. Meanwhile, at high aluminum prices, scrap yards held back from selling, and warehouse inflows rose with climbing scrap production, causing social inventories to shift from destocking to accumulation. Following the crackdown on invoice-related irregularities and the tightening of the reverse invoicing policy, YoY inflows at mainstream yards in some regions declined, and inventories showed a mild buildup trend. In contrast, inventories of aluminum tense scrap actually decreased. Over the same period, downstream sectors entered the traditional consumption off-season. Operating rates at scrap utilization enterprises stayed low, end-user orders lacked momentum, and the procurement pace turned more conservative. 3. Policy Since the "reverse invoicing" policy was rolled out in 2025, its enforcement was continuously tightened in H1 2026, but local implementation standards diverged significantly — regulatory oversight was relatively stringent in Anhui, Jiangxi, Hubei, and other regions. Some provinces saw the cancellation of tax refunds and intensified tax audits. Shandong also saw reports that reverse invoicing would be suspended from July, with the overall tax burden reaching up to 10.5%. This policy environment has directly led to persistently high tax compliance costs in the aluminum scrap recycling segment. Moreover, under the invoice-based economy norms, traders' invoicing quotas generally declined, causing a structural shortage of compliant invoiced scrap cargoes and notably tightening aluminum scrap liquidity. For scrap utilization enterprises, the impact has propagated along a chain of "tighter raw materials/rising costs — production cuts/suspensions — substitution risks": first, rising prices of invoiced raw materials directly pushed up procurement costs; subsequently, many small and medium-sized scrap utilization enterprises in regions such as Anhui, Jiangxi, and Hubei suffered losses and cut or suspended production; ultimately, the price difference between primary metal and scrap narrowed rapidly to historical lows as aluminum scrap held firm while primary aluminum fell, sharply eroding the cost advantage of scrap over primary aluminum. Some cast aluminum alloy enterprises are already considering using A00 aluminum ingots to replace aluminum scrap in production, posing a risk that the market demand base for aluminum scrap could be eroded. 4. Aluminum Scrap Production In terms of total volume, China's cumulative aluminum scrap production in January-June 2026 was 4.2928 million mt, up approximately 11.58% YoY from 3.8472 million mt in the same period of 2025. January production stood at 765,700 mt, surging 48.97% YoY, primarily due to the later Chinese New Year, leading to far more effective production days than the same period last year, coupled with front-load orders caused by the phase-out of auto industry policies. Affected by the Chinese New Year break, February production seasonally pulled back to 541,200 mt, but still grew by 10% YoY. March-April entered the traditional peak season, with production rebounding to 753,400 mt and 781,200 mt, posting YoY growth of 5.14% and 12.81%, respectively. The peak of the season was in April, and capacity release and the pace of work resumption remained normal. However, May production pulled back to 739,300 mt, with YoY growth narrowing to only 4.13%, indicating that the squeeze from the reverse invoicing policy on small and medium-sized scrap utilization enterprises began spreading from isolated cases to a broader scale. This trend accelerated in June, as production further dropped to 712,000 mt, turning negative YoY at -1.4% and down 3.69% MoM from May, making it the only month in H1 with negative YoY growth. The key reasons for the June decline were: the rising compliance costs caused by the reverse invoicing policy had already driven many small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei, and other areas into losses and production cutbacks, while the price spread between primary metal and scrap narrowed to historical lows, sharply diminishing the cost advantage of aluminum scrap. This dampened collection enthusiasm and caused a supply contraction at the source. Therefore, beneath the surface of "total volume growth but a front-loaded, then decelerating pace" in H1 aluminum scrap production, the reality is that the policy shock is rapidly transmitting from the cost side to the supply side, and the downward pressure on H2 production cannot be underestimated. 5. Aluminum Scrap Imports China’s cumulative aluminum scrap imports from January to May 2026 stood at approximately 849,300 mt, edging down 0.84% YoY from 856,500 mt in the same period of 2025. On the surface, the total volume was almost flat, but the monthly trend showed a pronounced “high-then-low” pattern, and the driving force shifted from ample overseas supply in Q1 to a combination of multiple bearish factors in Q2. Q1 cumulative imports grew 3.9% YoY, with Thailand as the largest source country maintaining steady shipments. At the beginning of the year, relatively ample overseas aluminum scrap supply and active stockpiling by domestic secondary aluminum enterprises together supported the high imports. Entering Q2, the situation took a sharp turn for the worse: April imports were 171,000 mt, down 10.4% YoY, and May imports further dropped to 152,000 mt, down 4.8% YoY and 10.9% MoM, forming a contraction pattern of declining volumes and prices. The bearish factors behind this were multidimensional and mutually reinforcing. First, the US-Iran geopolitical conflict drove LME aluminum prices sharply higher, and overseas spot aluminum scrap prices rose accordingly. The overall landed cost for domestic import traders was significantly higher than domestic aluminum scrap prices, and the persistent inversion of the price spread between Chinese and overseas markets directly dampened procurement enthusiasm. Second, high energy prices in Europe intensified competition among local secondary aluminum enterprises for aluminum scrap raw materials, and shipments to China from traditional source countries such as the UK, Spain, Belgium, and France all pulled back to varying degrees. A more far-reaching impact came from policy tightening in exporting countries: the UAE imposed a four-month temporary ban on aluminum scrap exports starting June 3, and the EU also plans to impose an additional 15% tariff starting September. Both factors tightened the availability of high-quality scrap in the Asian region from both immediate and expected aspects. In addition, aluminum scrap imports typically have a shipping lead time of 1-3 months. The significant reduction in purchases by traders in Q2 will be reflected in landing data in Q3, creating a “lagged impact.” Overall, although the total imports from January to May only edged down slightly, the driving structure has reversed from “stable volumes and rising prices” in Q1 to “declining volumes and prices” in Q2. Moreover, the contraction in overseas supply has only just begun to materialize, and the import outlook for H2 faces greater downward pressure. 6. H2 Outlook The aluminum scrap market is expected to continue consolidating on a subdued note in H2, but with significant bottom support. The price difference between primary metal and scrap has narrowed to a historic low, and the reverse invoicing policy constraint continues to establish a floor for aluminum scrap prices. If primary aluminum prices stabilize and rebound, there is room for a slight recovery in the spread, but the extent is limited; if primary aluminum continues to decline, the substitution effect of aluminum scrap will materialize at a faster pace, putting further pressure on the spread, and an extreme scenario of price inversion between scrap and primary aluminum may even emerge. The reverse invoicing policy is unlikely to see substantive easing in the near term, and the tightness of compliant, invoiced supply is expected to persist. Close attention should be paid to the policy implementation standards in newly joined provinces such as Shandong, changes in local tax inspection intensity, and whether there will be a window for optimizing and adjusting policy details. Overall, the core tension in the aluminum scrap market in H2 remains the tug-of-war between "supply contraction driven by policy tightening" and "consumption weakness caused by sluggish demand." Close attention also needs to be paid to progress in US-Iran negotiations and navigation conditions in the Strait of Hormuz, the pace of aluminum scrap arrivals from outside China and enforcement of the UAE ban, the compliance progress pace of the reverse invoicing policy and differences in local implementation, changes in aluminum ingot inventories, and when the inflection point for secondary aluminum alloy ingot inventory will appear. [Data source statement: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]

[Overseas Macro Bullishness Battles Supply Bearishness, China's Destocking Supports SHFE Aluminum Bottom] On the domestic front, bullish factors are prominent. The proportion of liquid aluminum has continued to rise. Over the past week, aluminum ingot warehouse withdrawals hit a four-year high, and the pace of inventory destocking has accelerated significantly, forming support for the bottom of SHFE aluminum. Amid the interplay of bullish and bearish factors, overseas, the bullish impact of the US dollar and the bearish forces from supply and geopolitics offset each other. After its earlier excessive decline, LME aluminum's downward momentum has slowed, and in the short term, it is mainly consolidating at lows for repair; domestically, supported by rapid destocking, the probability of underperforming LME aluminum is low. The SHFE and LME markets may show slight divergence, and a sustained unilateral weak trend is unlikely.

Anhui Haoyuan Aluminum Technology Co., Ltd. plans to construct the "Annual Output of 100kt Aluminum-based Materials and Deep Processing Technical Renovation Project," which is currently in the pre-approval public announcement stage for the environmental impact report and public participation explanation.

[Secondary Lead Production Dynamics] During the week, lead prices broke below 16,000; secondary lead smelters in Anhui suffered losses and halted production, leading to lower operating rates; smelters in Henan and Jiangsu restocked raw materials and increased production; smelters in Inner Mongolia will resume production next week; and overall, operating rates are expected to rebound slightly next week, with raw material and lead prices as key indicators to watch.