Secondary Aluminum Industry Operating Rate Falls to 56.4% Amid Weaker Demand and Policy Tightening

[SMM Update] China's mainstream consumption areas saw secondary aluminum alloy ingot inventory decrease by 99 mt WoW from last Friday to 31,200 mt, mainly driven by destocking in Foshan and Ningbo.

[Easing China-U.S. Trade Tensions Combined with Ex-China Supply Gap — LME Outperforms SHFE in Aluminum Prices] The macro front received positive signals as China-U.S. trade negotiations yielded preliminary results. Both sides agreed to continue implementing prior tariff arrangements and to establish a Trade and Investment Council, which is expected to facilitate tariff reductions on certain products. The marginal easing of trade frictions is set to improve export expectations for aluminum semis and end-use products, providing bullish support for market sentiment. However, inventory at high levels in China remains the core factor suppressing significant price rallies. Coupled with weak spot market trading performance, this further limits the upside room for aluminum prices. In the short term, aluminum prices are expected to continue the pattern of LME outperforming SHFE, fluctuating at highs.

At the earnings briefing on May 15, Hongqiao Holdings disclosed that the company expects capital expenditure of approximately 9 billion yuan in 2026. Among this, the aluminum processing segment will focus on advancing the upgrade of supporting processing capacity in the Yunnan region, enhancing the local absorption capability of aluminum in that region, thereby further consolidating and expanding the synergistic advantages of the entire industry chain. It is worth noting that some of the projects were announced in March 2026 and have been included in the first batch of provincial-level major project list of Yunnan Province for 2026, with public disclosure already completed. Currently, the company has no new expansion plans for the aluminum processing segment.