SMM, Aug 12:
Jul 2026 Survey Data:
According to the SMM survey, the operating rate of China's secondary aluminum industry rebounded slightly to 34.6% in Jul 2026, up 1.4 percentage points MoM from June, while it fell 7.0 percentage points YoY. Operating rates among secondary aluminum alloy enterprises showed mixed performance, with the overall industry recovering modestly from a low base.
Raw material side, the shortage of compliant aluminum scrap and invoices remained the core factors constraining production. Many enterprises faced invoice and material shortages due to tight domestic tax-included scrap supply or price inversion of imported aluminum scrap, controlling output through production cuts, phased shutdowns, or reductions in low-processing-fee orders. Although some regional policies showed marginal easing, the quota for issuing invoices was limited, providing weak support for the operating rate. Meanwhile, the price spread between A00 aluminum and ADC12 widened in early July, prompting some enterprises to increase A00 aluminum ingot purchases as a substitute for aluminum scrap, which provided some support for production. However, due to high costs and limited substitution scale, the overall increase in production was relatively small.
Demand side, overall orders were moderate in July, but demand weakened marginally in the second half of the month due to high temperatures and downstream holiday-related reductions. According to CAAM data, auto production and sales in July reached 2.573 million and 2.584 million units, down 6.8% and 8.0% MoM, respectively, and down 0.7% and 0.3% YoY. The automotive market entered the traditional off-season in July, with foot traffic and orders experiencing a natural pullback. Combined with the early release of demand driven by half-year sales pushes, persistent nationwide high temperatures, and the impact of typhoons and floods in some regions on offline sales, the market showed a seasonal pullback MoM.
In summary, the industry had already undergone significant production cuts in May-June, leaving relatively limited room to further compress output. At the same time, raw material supply and order conditions improved at some enterprises, driving a slight rebound in the overall operating rate in July from a low base, though it remained significantly weaker YoY. Entering August, secondary aluminum alloy production is expected to remain stable at a low level overall, with insufficient basis for a significant production increase. Raw material side, the tightness in compliant aluminum scrap and the invoice issue are unlikely to fundamentally improve in the short term. Although some regional policies have seen marginal relaxation, their effect on improving overall supply will be limited. Demand side, the first half of August is still within the high-temperature off-season, while in the second half, demand is expected to see marginal improvement driven by automotive-related orders as the high-temperature holiday season ends. Overall, the industry operating rate in August is expected to show little change compared to July. Production may see limited recovery at some enterprises with improved raw material supply or better orders, but the broader industry will mainly operate stably at a low level.
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Data description: This survey covers a total capacity of 13.11 million mt.
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