Aluminum prices rise in July

Aluminum prices rise in July
In July 2026, domestic aluminum ingot prices stopped falling and rebounded. As of July 30, 2026, the average price of domestic aluminum ingots in the East China market was 23643.33 yuan/ton, an increase of 6.17% from the market average price of 22270 yuan/ton on July 1.
The rise in aluminum prices in July is a market driven by the resonance of multiple factors: the oversold repair caused by the significant decline in prices in the early stage has built the bottom of the market, coupled with the marginal improvement of overseas macro liquidity expectations driving prices up, and the rigid and difficult expansion of electrolytic aluminum supply, as well as the overall low inventory operation of the market, forming solid support. At the same time, downstream enterprises are replenishing inventory at low prices to further match spot demand. The overall industry fundamentals continue to tighten and tighten, effectively compressing the space for market correction.
Reasons for the rebound and rise in aluminum prices in July:
1. Macro funding benefits:
US data weakens, expectations of interest rate hikes cool down, and the US dollar falls. In July, the US CPI and non farm payroll data fell short of market expectations, and the market significantly lowered the probability of the Federal Reserve raising interest rates. The real interest rate of US bonds declined, and the US dollar index weakened. Aluminum is priced in US dollars, and Lunan Aluminum is the first to repair its valuation, driving Shanghai Aluminum to strengthen synchronously; Funds have shifted from fixed income to commodities, and the non-ferrous sector has collectively rebounded. Low end aluminum has ushered in a capital allocation market.
In June, there was a deep oversold, with short positions concentrated on replenishing and buying funds entering the market. At the end of June, the disappearance of geopolitical premiums coupled with panic over interest rate hikes led to a concentrated sell-off in the market, with prices severely oversold and short positions accumulating. At the beginning of July, a large number of short positions were liquidated and left the market, and industrial funds were replenishing at a low level to go long, giving rise to the first wave of technical rebound market.
Positive news in the sector stimulates sentiment. Aluminum Corporation of China has launched a plan to increase its holdings by 1-2 billion yuan, coupled with the significant increase in profits reported by major electrolytic aluminum companies in the first half of the year, the valuation of the aluminum sector has been restored, and the upward momentum has been amplified.
2. Fundamental rigid support:
There is no incremental elasticity in domestic supply. Domestic electrolytic aluminum has implemented a permanent production capacity red line of 45 million tons, with a current industry operating rate close to 98% and operating capacity basically at full capacity, with no new capacity released; The proportion of direct supply of aluminum water continues to rise, and the number of circulating aluminum ingots in the market is shrinking; Combined with the expected increase in energy consumption control in various regions during the summer, there is a potential expectation of production reduction in the market, and the supply side continues to be rigid.
Overseas supply has been tight for a long time. The Middle East accounts for about 9% of the world’s electrolytic aluminum production capacity. The slow resumption of production capacity caused by previous geopolitical conflicts has resulted in a restart cycle of several months for smelting facilities, which cannot make up for the supply gap in the short term. Geopolitical risks have repeatedly brought premium support. European electricity prices have remained high for a long time, and local aluminum plants have maintained regular production cuts; The production and ramp up progress of new overseas production capacity is slow, and the overall global supply increment is very limited. LME aluminum inventory has fallen to a nearly four-year low, with Russian aluminum accounting for over 90% of warehouse receipts. Due to the impact of sanctions, circulation is restricted, and real deliverable spot goods are scarce. Foreign spot goods continue to be held at high prices.
3. Abnormal destocking during the off-season and strengthening of spot fundamentals:
Traditionally, July belongs to the off-season for aluminum consumption, but the social inventory of electrolytic aluminum in China continues to steadily decrease, breaking the seasonal accumulation pattern and causing a tight supply of spot goods; The inventory of the previous period fell synchronously, and the spot premium rose, providing solid bottom support to the market and preventing prices from weakening again.

4. Demand resilience exceeds expectations, downstream low-level replenishment to support the bottom:
Traditional building profiles are weakening during the off-season, but the demand for photovoltaics, lightweight new energy vehicles, and ultra-high voltage power grids remains stable, offsetting the weakness of traditional consumption. Aluminum export data remains high, with overseas orders forming external demand to support the bottom; After the sharp drop in aluminum prices, downstream processing plants concentrated on stocking up and purchasing at low prices, and spot buying increased, driving transaction recovery.
Aluminum price forecast for the future:
In August, the electrolytic aluminum market relied on rigid production capacity constraints, phased supply contraction at home and abroad, sustained destocking during the off-season, and macro liquidity marginal easing to form a stable bottom support. Coupled with downstream pre stocking during peak season and hedging against traditional consumption off-season demand for new energy, the overall market maintained a high and strong operation; However, due to the weak performance of terminal spot prices during the off-season, expectations of the National Reserve’s reserve sales regulation, and pressure from previous bullish profit realization, prices are difficult to break out of a continuous unilateral upward trend, showing an overall trend of range oscillation and upward movement. The center of gravity of the operation steadily shifts upward, and the space for correction is very limited.