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.

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.

In June the aluminum processing industry exhibited a pronounced divergence pattern of "external demand outperforming domestic demand, with the aluminum wire and cable industry unable to sustain the market on its own." Export orders, energy storage, UHV, and other areas provided structural support, but a combination of weak domestic consumption, wild swings in aluminum prices, and policy disruptions made it difficult for the overall industry sentiment to recover markedly in the short term.

This week, the operating rate at China's leading downstream aluminum processing enterprises came in at 63%, down 0.4 percentage points MoM. Weighed down by the deepening seasonal off-season across the sector, downstream purchase willingness was broadly subdued, and operating rates across most segments remained under pressure. Primary aluminum alloy held steady at 59.4%, as enterprises mainly focused on executing existing long-term contracts, with no release of new spot orders.

This week, the operating rate of China's downstream aluminum processing industry leaders was recorded at 64%, edging down 0.1 percentage point WoW, with significant divergence across sub-sectors. The operating rate of primary aluminum alloy edged up 1.2 percentage points WoW to 59.4%; although supply remained normal, demand recovery was slow, and the rate is expected to hold steady in the short term. The operating rate of aluminum plate/sheet and strip edged down 0.2 percentage points to 72.0%, with robust export orders offsetting weak domestic demand caused by high aluminum prices. The operating rates of aluminum wire and cable and aluminum extrusion held flat at 68.0% and 57.6% respectively; aluminum wire and cable benefited from a significant increase in aluminum stranded wire exports. Extrusion side, steady growth in home decoration orders partially offset the drag from weak real estate recovery, while industrial extrusion demand remained solid, expected to hold up well in the short term. The operating rates of aluminum foil and secondary aluminum producers declined 0.3 and 1 percentage point respectively to 73.3% and 53.9%, affected by multiple factors including fading peak season, air-conditioner foil drag, bill supervision tightening, and weakening demand, facing sustained downward pressure going forward. Overall, strong exports partially compensated for insufficient domestic demand, but high aluminum prices, cost pressure, and off-season factors continued to constrain the industry's upside room. Primary aluminum alloy: This week, the operating rate of China's industry leaders in primary aluminum alloy rose 1.2 percentage points WoW to 59.4%. Supply side, enterprises maintained normal production schedules overall. Some enterprises saw operating rates rebound recently as prior inventory had been largely depleted. Demand side, the aluminum price center shifted lower this month MoM, but downstream spot order quotes remained generally scarce, with the market primarily executing long-term contracts as usual. As downstream demand recovered slowly, primary aluminum alloy enterprises intensified competition for limited orders, leading to a slight increase in overall inventory. Overall, with aluminum prices maintaining current levels, the stimulus effect on downstream consumption remained limited. The operating rate of the primary aluminum alloy industry is expected to stay at current levels, likely remaining stable next week. Aluminum plate/sheet and strip: This week, the operating rate of aluminum plate/sheet and strip industry leaders edged down 0.2 percentage points WoW to 72.0%. Operations side, plate/sheet, strip and foil industry leaders maintained a generally stable production pace, but disrupted shipment pace had not yet eased due to persistently high aluminum prices and downstream speculative purchasing patterns. Orders side, stable domestic can stock packaging demand provided a floor; ESS sector battery casings, brazing materials and other products maintained high operating rates as downstream orders extended into Q3, forming a key support; auto sheets benefited from MoM rebound in new energy vehicle sales in May and strong exports, with orders recovering at the margin. Export side, a stronger overseas market significantly benefited China's exports, with enterprises reporting export orders already extended to late August and beyond, with full orders on hand. However, the domestic commodity plate market faced a severe situation: aluminum ingot average prices had long operated at a high level of 24,000 yuan/mt, civilian aluminum semis demand contracted sharply, fixed-price engineering orders were widely delayed as picking up goods meant immediate losses, and domestic orders showed signs of weakening. In the short term, although strong exports could offset some weak domestic demand, aluminum price fluctuation risks intensified, and enterprises tended to control production schedule pace while destocking simultaneously. The operating rate of aluminum plate/sheet and strip is expected to be under pressure in June. Aluminum wire and cable: The domestic aluminum wire and cable industry operating rate held steady at 68.0% this week, flat WoW. The industry operating rate stayed high during the week, mainly supported by strong export order activity. Resilient ex-China demand continued to drive enterprise production plans, and near-term industry orders remained focused on aluminum stranded wire export orders. In contrast, domestically, the pace of power grid construction project order placement was slower than expected at the beginning of the year. Recent power grid tenders were dominated by low-voltage and overhead lines, and the marginal boost from order production schedules to operating rates weakened. However, sustained volume growth in export orders effectively filled the gap in domestic demand, and the order structure continued to show a pattern of "strong exports, stable domestic." Under the current dynamic between high export growth and stable domestic demand, industry shipments maintained a dynamic balance, and operating rates are expected to remain resilient in the near term. Aluminum extrusion: The domestic aluminum extrusion operating rate held steady at 57.6% this week, with the industry continuing a mild operating trend overall. On the architectural extrusion side, home renovation orders maintained steady incremental growth recently. Combined with some enterprises having previously secured large-scale project orders such as supertall buildings and corporate headquarters, their volume advantage and longer delivery cycles provided sustained support for industry operations, partially offsetting the drag from weak real estate recovery. On the industrial extrusion side, demand in segments such as power systems, automotive lightweighting, and PV frames remained solid, supporting stable industry operations. Multiple large enterprises reported that May orders remained robust and held an optimistic outlook for June orders. However, some small and mid-sized industrial extrusion enterprises reported that to maintain healthy cash flow, they expect to moderately control order-taking to ease finished product inventory pressure. Some enterprises also proactively declined orders with low processing fees to maintain reasonable margins, leading to slight divergence in industry operations. Overall, off-season characteristics had not yet emerged, and the aluminum extrusion operating rate is expected to continue to hold up well next week. Aluminum foil: The operating rate of aluminum foil industry leaders pulled back 0.3 percentage points WoW to 73.3% this week. At the enterprise operation level, the traditional peak-season effect was gradually fading. Although orders on hand at industry leaders remained ample, structural divergence intensified. On the order side, demand for food packaging foil and pharmaceutical foil was at the tail end of the peak season, and domestic orders were set to face a seasonal pullback. Battery foil, on the other hand, benefited from robust battery end-use demand, with tight production schedules. However, the air-conditioner foil segment faced notable pressure: June household air conditioner domestic sales production schedules were sharply revised down YoY, downstream clients bargained aggressively, hydrophilic foil processing fees were running near cost, and the air-conditioner foil segment entered a downturn earlier than in previous years. In June, the packaging off-season effect and the drag from air-conditioner foil are expected to gradually dominate, with operating rates continuing to pull back. Secondary Aluminum: This week, the operating rate of secondary aluminum industry leaders fell 1 percentage point WoW to 53.9%, mainly weighed down by dual pressures from both the cost and demand sides. Cost side, invoice regulation continued to tighten with an expanded scope, and the shortage of compliant input invoices forced some secondary aluminum producers to cut production, significantly dampening their willingness to operate. Demand side, downstream consumption weakened further after June, with new orders for die-casting remaining sluggish. Although ADC12 prices were raised consecutively at the beginning of the week driven by costs, downstream buyers showed limited acceptance of high prices, restocking mainly on rigid demand with little willingness to rush to buy amid continuous price rise, and transaction volumes failed to increase in tandem. Overall, if invoice issues continue to escalate and the off-season deepens further, the industry operating rate still faces downward pressure.

Since late April, aluminum billet processing fees in China's three major consumption regions staged a strong rebound, with South China taking the lead. Processing fees of φ120 aluminum billets (Guangdong) hit a Q2 low of -40 yuan/mt on April 16, then surged rapidly, approaching the 500 yuan/mt mark by month-end in May, and reaching a new yearly high of 490 yuan/mt on May 28. SMM believed there were three main reasons...

According to SMM statistics, on May 28, aluminum billet inventory in China's major consumption regions fell to 181,500 mt, a significant destocking of 24,000 mt WoW, successfully pulling back below the 200,000 mt threshold. Warehouse withdrawals during the week climbed to 58,900 mt, up 3,200 mt WoW, hitting a new periodic high.

In May, China's aluminum fabrication industry recorded an overall PMI of 50.8%, barely staying above the 50 mark but pulling back significantly by 3.1 percentage points from April. Industry sentiment slid from the edge of expansion territory toward the critical threshold, with structural divergence intensifying further.

This week, operating rates across sub-sectors of China's aluminum processing industry continued their overall weak trend. The post-Labour Day holiday effect, combined with wild swings in aluminum prices, led to varying degrees of WoW pullback in operating rates across most sectors, with the overall rate recorded at 64.2%. Specifically, aluminum plate/sheet and strip operating rate fell to 72.6%, aluminum foil edged down to 74.7%, aluminum wire and cable recorded 66.6%, primary aluminum alloy rose slightly to 58%, leading secondary aluminum enterprises dropped to 57.0%, and aluminum extrusion operating rate also slipped slightly to 56.1%. Demand side, post-holiday aluminum prices fell by 480 yuan/mt in a single day, causing some traders to incur book losses, with cargo pick-up sentiment generally subdued. Underperforming real estate terminal completions continued to drag on construction extrusions and the air-conditioner foil segment within aluminum foil. PV frame enterprises also reduced their May production schedules, and passenger NEV growth falling short of expectations placed certain constraints on primary aluminum alloy. Overall, the consumption side was gradually showing traditional off-season characteristics. Cost side, high aluminum prices suppressed downstream enterprises' willingness to stockpile, compliant aluminum scrap sources remained tight with prices staying elevated, secondary aluminum industry profits continued to be under pressure, and some enterprises had already fallen into losses. However, aluminum wire and cable export orders continued to climb, with April expected to approach historical highs. Within aluminum extrusion industrial orders, heat sinks and industrial machinery accessories performed relatively well. Within aluminum foil, demand for food packaging foil, pharmaceutical foil, and battery foil remained stable. Automotive aluminum sheets & plates orders also benefited from the YoY and MoM double growth in April passenger NEVs, maintaining a recovery trend. Overall, in the short term, the aluminum processing industry's overall operating rate still faces downward pressure. The demand off-season and cost pressure form a dual suppression, and operating rates across sectors are expected to be under pressure in May. However, strengthening export orders and structural recovery in certain industrial demand segments will provide some bottom support for the industry. Primary aluminum alloy: This week, the primary aluminum alloy operating rate was 58%, showing a slight recovery WoW, but the rebound remained limited. Structurally, aluminum consumption at some enterprises increased, driving the overall operating rate slightly higher. However, most enterprises continued to primarily execute long-term contracts as normal, with overall operations running steadily. Current aluminum prices remained at elevated levels, suppressing downstream enterprises' willingness to stockpile, with most enterprises maintaining low inventory operations. Additionally, passenger NEV growth falling short of expectations also resulted in relatively slow demand growth. Overall, the primary aluminum alloy operating rate is expected to remain at the current level next week. Aluminum plate/sheet and strip: The operating rate of leading aluminum plate/sheet and strip enterprises edged down 0.4 percentage points WoW from pre-holiday levels to 72.6% this week. On the operational front, production lines at leading aluminum plate/sheet and strip enterprises ran normally during the Labour Day holiday with a steady production pace, but initial signs of operational pressure emerged in the industry. Post-holiday, aluminum prices pulled back, with a single-day drop of 480 yuan/mt. Some traders and dealers incurred book losses after purchasing, and sentiment for picking up goods was generally low. By product, domestic end-use demand for can stock packaging remained stable; auto sheets & plates orders benefited from the recovery of passenger NEVs in April with both YoY and MoM growth, still in a recovery trend; 1-series common plates and civilian general aluminum semis saw weak orders due to delayed cargo pick-up for engineering orders and shrinking civilian demand. In the short term, constrained by factors such as wild swings in aluminum prices and pressure on common plate orders, downward pressure on the operating rate of leading aluminum plate/sheet and strip enterprises is gradually increasing in May. Aluminum wire and cable: The operating rate of China's aluminum wire and cable industry registered 66.6% this week, edging down 1 percentage point WoW from pre-holiday levels. Although top-tier enterprises still held some power grid orders, they proactively reduced production loads due to the holiday factor and order losses, resulting in a decline in capacity utilization rate. Currently, domestic power grid end-use demand still dominates consumption, but the concentrated cargo pick-up cycle has passed, providing limited support to the overall industry operating rate. In contrast, export orders for aluminum stranded wire climbed, and Q2 exports are expected to increase significantly this year. April exports are expected to approach or break historical highs, and May exports are expected to increase by 10,000-20,000 mt MoM. Export orders will provide support to industry operations. Aluminum extrusion: The operating rate of China's aluminum extrusion industry was 56.1% this week, down 0.4 percentage points WoW, showing a generally stable but weakening trend. By segment, for architectural extrusion, dragged by domestic real estate terminal completion progress falling short of expectations, engineering orders continued their weak trend this week, and demand growth in the home decoration doors and windows segment was limited, failing to provide effective support, slightly dragging down the overall operating performance of architectural extrusion. For industrial extrusion, downstream tier-one PV module enterprises' May production schedule plans contracted, and PV frame enterprises saw a decline in operating rates. Some Hebei frame enterprises chose to shut down for 5 days during the Labour Day holiday to offset order pullback and ease cost pressure, maintaining a relatively full production schedule after the holiday; some Anhui frame enterprises reported that orders on hand remained generally stable with no significant reduction, resulting in relatively limited drag on operations. Additionally, large Guangdong aluminum extrusion enterprises reported that recent orders for heat sinks, industrial machinery accessories, and other industrial extrusion products performed well, providing support to regional industrial extrusion operations. In the short term, the weakness in architectural extrusion and the structural recovery in industrial extrusion offset each other, and the aluminum extrusion operating rate is expected to show a stable and improving trend. Aluminum foil: This week, the operating rate of leading aluminum foil enterprises fell 0.3 percentage points WoW from pre-holiday levels to 74.7%. Order side, demand for food packaging foil, pharmaceutical foil, and battery foil remained stable, supporting the baseline operating rate. Air-conditioner foil was under pressure, with May orders on hand declining MoM, as demand was dragged down by factors including a sluggish real estate market, tapering of national subsidies, high inventories outside China, and capacity relocation. Both domestic sales and export schedules declined, and weak end-use demand is expected to pull down the overall aluminum foil operating rate. In the short term, demand for packaging foil and battery foil can still support the aluminum foil operating rate at a relatively high level, but the deep weakness in air-conditioner foil will set the stage for an overall pullback in the aluminum foil industry's operating rate in May. Secondary aluminum: This week, the operating rate of leading secondary aluminum enterprises in China fell 0.7 percentage points WoW to 57.0%. During the holiday, sampled major plants maintained normal production, but affected by some downstream enterprises being on holiday and declining orders, enterprises compressed their production pace, and operating levels pulled back slightly. Currently, both demand and raw materials exerted dual pressure on production: on one hand, May gradually entered the traditional consumption off-season, downstream procurement became more cautious, market transaction activity continued to decline, and manufacturers' order performance was poor; on the other hand, finished alloy ingot prices fell more than raw material prices, compliant aluminum scrap sources remained tight with prices fluctuating at highs, industry profits continued to narrow, and some enterprises even fell into losses, with operating rates passively under pressure. After the holiday effect fades next week, the operating rate is expected to recover slightly, but the demand off-season and cost pressure are unlikely to improve significantly in the short term, and the industry's overall operating rate still faces downward expectations. [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.]

Key Points: Over the next five years, China's aluminum billet market is expected to exhibit a pattern of "dual growth in supply and demand but continued surplus, optimized capacity structure, and intensified demand differentiation," as the industry shifts from scale expansion to quality improvement...