This week, the overall operating rate of leading aluminum downstream processing enterprises in China rose 0.4 percentage points WoW to 62.1%, with the "September peak season" effect continuing to strengthen and various sectors showing a stepwise recovery pattern. The operating rate of the primary aluminum alloy sector increased significantly by 1 percentage point to 57.6%, driven by strong capacity release from top-tier enterprises, though small and medium-sized enterprises still faced order gaps. The aluminum wire and cable industry's operating rate edged up 0.4% to 65.2%, as regional environmental protection inspections were lifted, but capacity recovery in Hebei lagged behind expectations, while power grid orders supported higher operating rates at leading firms. The aluminum extrusion operating rate rebounded 1 percentage point to 54%, with accelerated transition from architectural to industrial profiles, processing fees for PV frames hitting bottom and stabilizing, and new orders for automotive extrusion becoming a highlight. The operating rate of leading aluminum plate/sheet and strip enterprises held steady at a high of 68.6%, as the can stock stockpiling cycle neared its end, and demand resilience in automotive/3C sectors stood out. The aluminum foil industry's operating rate remained at a peak level of 71.9%, though peak season order growth fell short of expectations, with stable demand for packaging foil and battery foil. The operating rate of secondary aluminum producers rose slightly by 0.5% to 53.5%, as consumption-side improvements drove the rebound, but raw material shortages and policy factors continued to constrain capacity recovery. SMM believes that, driven by consumption recovery in terminal sectors such as 3C, automotive, and PV, the aluminum processing industry has re-entered its peak season rhythm. Although the real estate sector remains sluggish, ongoing order releases in the new energy sector have effectively offset this, and downstream aluminum consumption is still expected to increase. SMM expects the operating rate of the aluminum processing industry to continue rising in mid-September, but cautions about the impact of high aluminum prices on downstream stocking willingness.

This week, the overall operating rate of leading domestic aluminum downstream processing enterprises rose 1 percentage point (ppt) WoW to 61.7%, as the "September peak season" effect gradually emerged, with recovery trends improving across all sectors. The operating rate of primary aluminum alloy producers edged up 0.2% to 56.6%, showing a slow recovery pace during the peak season, as the time-lag effect of policy support transmitting to end-use demand persists, with no clear positive factors driving a significant rise in operating rates. The operating rate of leading aluminum plate/sheet and strip producers surged 1.2 ppts to 68.6%, benefiting from order volume growth in automotive and 3C sectors and a rebound in foreign trade, while higher aluminum prices boosted stockpiling willingness, making it the industry chain's recovery leader. The operating rate of the aluminum wire and cable industry increased 1 ppt to 64.8%, driven by concentrated delivery of power grid orders in Jiangsu and Henan, though small and medium-sized producers in Hebei lagged due to environmental protection-driven production restrictions during the military parade, with the rate expected to exceed 66% next week after capacity release in North China. The operating rate of aluminum extrusion producers rebounded 1 ppt to 53%, as construction extrusion remained weighed down by real estate but was supported by export orders to the Middle East and Africa, while industrial extrusion saw continued PV module installation rush and initial signs of growth in automotive battery tray orders. The operating rate of leading aluminum foil producers maintained steady growth of 0.8 ppts to 71.9%, with packaging foil and decorative foil replacing air-conditioner foil as new drivers, as the industry prepares for the Mid-Autumn Festival and National Day stockpiling cycle. The operating rate of secondary aluminum producers rose significantly by 1.8 ppts to 55.3%, lifted by the end of environmental restrictions and peak-season restocking, though tight aluminum scrap supply and uncertain tax rebate policies continued to constrain capacity release among small and medium-sized enterprises. SMM analysis indicates the aluminum processing industry has entered a "structural peak season," with broader operating rate increases expected by mid-September, focusing on key variables such as power grid construction cycles, PV export performance, and automotive industry order patterns.

[SMM Aluminum Morning Meeting Minutes: US Labor Market Weakness Strengthens Expectations for US Fed Interest Rate Cuts, Manufacturing National Standard Upgrade Boosts Long-Term Demand] The macro environment at home and abroad remains favorable. Supply side, replacement capacity continues to ramp up, with weekly production increasing slightly to 847,300 mt. Cost side, the full cost of domestic aluminum stood at 16,618 yuan/mt, down 36 yuan/mt WoW, while the industry average profit narrowed to around 3,991 yuan/mt, decreasing 84 yuan/mt WoW. Downstream demand showed marginal improvement, with the proportion of liquid aluminum rising and casting ingot volume declining. However, the aluminum ingot inventory has yet to peak, and actual demand has not seen significant recovery. Downstream enterprises face limited room for cost increases. Aluminum prices are expected to remain under pressure at the 20,900-21,000 yuan/mt range, but expectations for interest rate cuts coupled with seasonal demand may provide some support. SMM expects aluminum prices to move sideways in the short term.

[SMM Aluminum Weekly Review: Demand Shows No Significant Improvement, Inventory Inflection Point Yet to Arrive, Aluminum Prices Remain Under Pressure in the Short Term]

[SMM Aluminum Morning Meeting Summary: Macro and Fundamentals in a Tug-of-War, SHFE Aluminum to Fluctuate at Highs in Short Term] Macro front, expectations for US Fed interest rate cuts intensified, coupled with China's policy efforts to stimulate domestic demand, creating an overall bullish sentiment that may boost aluminum consumption prospects. However, the transmission of domestic policy support to actual consumption still requires time. Fundamentals-wise, supply side saw minor growth in operating capacity as some replacement capacities came online, with production edging up slightly. The proportion of liquid aluminum is expected to rebound in September. Cost side, weekly total aluminum production costs showed minimal changes, with industry profits remaining high. Demand side remains the core focus for the market ahead. As the September-October peak season approaches, downstream operating rates showed stronger recovery signs last week, with aluminum extrusion and plate/sheet, strip and foil sectors posting notable increases. Entering early September, consumption only exhibits marginal improvement, and effective inventory destocking still needs time to materialize. However, current total inventories remain low, and some secondary aluminum enterprises in Anhui and Jiangxi provinces have received notices on the termination of tax rebate policies, posing risks of lower capacity utilization rates for scrap utilization enterprises, which may support primary aluminum consumption. Aluminum prices during the traditional September peak season are more likely to rise than fall overall, though upside resistance persists. For prices to effectively break through the key 21,000 yuan/mt resistance level, confirmation is needed through the realization of peak season consumption expectations and sustained strength in downstream operating rates, supported by a subsequent domestic aluminum ingot destocking inflection point.

[SMM Aluminum Morning Meeting Summary: Expectations for US Fed Interest Rate Cuts Heat Up, Aluminum Prices Hold Up Well] Macro front, expectations for US Fed interest rate cuts intensified, coupled with China's policy efforts to boost domestic demand, creating an overall favorable atmosphere that is expected to enhance aluminum consumption prospects. However, the transmission of domestic policy support to actual consumption still requires time. Supply side, with the commissioning of a small amount of replacement capacity, operating capacity saw a modest increase, while production edged up slightly. The proportion of liquid aluminum in September is expected to rebound. Cost side, the weekly total cost of the aluminum industry changed minimally, with high industry profits remaining. Demand side remains the core focus for the market going forward. As the September-October peak season approaches, downstream operating rates showed stronger signs of recovery last week, with operating rates for aluminum extrusion and aluminum plate/sheet, strip and foil sectors rising to varying degrees. Entering early September, consumption has only shown marginal improvement, and effective destocking still requires time to materialize. However, current inventory levels are not high, and some secondary aluminum enterprises in Anhui and Jiangxi provinces have received notices of termination of tax rebate policies, posing a risk of declining capacity utilization rates for scrap utilization enterprises, which provides some support for primary aluminum consumption. During the traditional peak season in September, aluminum prices are more likely to rise than fall overall, but upside resistance remains. For aluminum prices to effectively break through the key resistance level of 21,000 yuan/mt, the market needs to await the realization of consumption expectations during the September-October peak season, validated by subsequent domestic aluminum ingot destocking inflection points and sustained strength in downstream operating rates.