Aluminum prices rise by 2.09% in December
Aluminum prices rose in December. According to the Commodity Market Analysis System of Shengyi Society, as of December 30, 2025, the average price of aluminum ingots in the East China market in China was 22193.33 yuan/ton, an increase of 2.09% from the market average price of 21740 yuan/ton on December 1.
In December 2025, aluminum prices continued their upward trend from the end of October and repeatedly hit new highs for the year, while raw material alumina prices fell from their high levels. Currently, the profit per ton of aluminum is in a relatively good position. The strengthening of aluminum prices in December was mainly driven by the combination of four factors: rigid supply constraints, high demand for new energy, bottom rise in costs, and resonance between macro and financial sentiment. In addition, the price resilience during the off-season exceeded expectations. The specific reasons are as follows
1. Supply side: Red line lock-in+limited structural contraction increment
Rigid constraint of production capacity red line: The production capacity ceiling of 45 million tons of electrolytic aluminum in China has not been loosened, and the operating capacity in December was about 44.1 million tons, with a capacity utilization rate of over 97%. The newly added replacement projects are only 650000 tons and most of them will be put into operation in 2026, with no short-term increase.
Electricity and weather disturbances: Insufficient hydropower output in Yunnan and Guangxi has led to production cuts for some enterprises, and short-term transportation disruptions in Xinjiang. Coupled with environmental control measures, the operating rate remains high but the marginal increase is limited.
The import window is closed: the price difference between domestic and foreign markets is “strong on the outside and weak on the inside”. The import volume in December fell month on month, and overseas Europe and the United States continued to reduce production due to high energy costs. LME inventories were low, and the global supply situation remained tight.
2. Demand side: New energy high growth supports marginal improvement in traditional industries
The explosion of new energy demand: the lightweighting of new energy vehicles, accelerated construction of ultra-high voltage, and growth in photovoltaic installed capacity have driven a year-on-year increase of 12% -15% in demand for aluminum cables and vehicle aluminum plates, becoming the core engine of demand.
Resilience in traditional fields: The decline in aluminum use in the construction industry has narrowed, automobile exports have maintained high growth, and orders for aluminum rods, aluminum sheets, strips, and foils have rebounded marginally, supporting stable total consumption.
Low inventory strengthening expectation: LME aluminum inventory remains low, and although there is accumulated inventory in the main ports of East China, the growth rate has slowed down, supporting prices under the expectation of destocking.
3. Cost side: resonance between alumina and electricity costs, bottom lifting
Alumina prices have stopped falling and rebounded: After mid December, alumina prices rebounded from 2480 yuan/ton to 2600 yuan/ton due to the increase in bauxite import costs and the decline in operating rates, raising the cost line for electrolytic aluminum.
Rising electricity costs: Thermal power companies have been affected by the rebound in coal prices, resulting in an increase of approximately 300-500 yuan in the cost of electricity per ton. During the dry season, electricity prices for hydropower companies in Yunnan have also increased, providing stronger cost support.
Carbon cost expectation: The implementation of the EU CBAM policy is approaching, pushing up the long-term cost curve of global aluminum companies and providing implicit support for prices.
4. Macroeconomics and funding: Weakening of the US dollar+catalysis of loose liquidity sentiment
Expectations of Federal Reserve interest rate cuts are heating up: The December interest rate meeting released a signal of a 2026 interest rate cut, and the US dollar index fell to the 101 level, increasing the attractiveness of aluminum prices denominated in US dollars.
Domestic liquidity easing: The central bank lowered reserve requirement ratio in December, releasing 1.2 trillion yuan of funds, and the valuation of cyclical sectors was repaired.
Driven by copper prices: Copper prices have exceeded 100000 yuan/ton, and aluminum prices have followed suit with expectations of copper aluminum price recovery.
5. Inventory and Expectations: Low inventory supports bottom line, accumulation pressure is marginally controllable
The inventory of domestic main ports in East China is about 610000 tons, although it has increased by 9.1% month on month, the accumulation rate of inventory has slowed down due to the expectation of supply contraction. The outbound volume rebounded in late December, and inventory pressure did not significantly suppress prices.
LME inventory is at a low level during the same period, and the overseas low inventory pattern has not changed, supporting the upward trend of global aluminum prices.
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