According to the SMM survey, as of September 2025, the total sample capacity of domestic aluminum rod reached 8.388 million mt, a net increase of 768,000 mt from the beginning of the year, showing a rapid expansion trend. The newly added capacity was mainly distributed across six provinces: Inner Mongolia, Shanxi, Xinjiang, Guangxi, Shandong, and Sichuan. Meanwhile, the newly commissioned capacity in H2 reached 338,000 mt (including projects under construction), with the overall growth rate significantly faster than the same period last year. The accelerated capacity growth in the aluminum rod industry is currently driven by three main factors:
1. Driven by the year-end liquid aluminum alloying targets, aluminum enterprises continuously commissioned alloy projects within the year, boosting the liquid aluminum conversion rate of aluminum smelters. By September 2025, the proportion of liquid aluminum at domestic aluminum smelters recorded 76.3%, up 1.2 percentage points MoM.
2. Due to the relative surplus capacity in the aluminum billet industry, coupled with aluminum billet processing fees operating below the cost line for an extended period last year, some liquid aluminum flow shifted towards aluminum rod this year, promoting the commissioning of new capacity in the industry. As of September 2025, the SMM sample capacity for aluminum billet recorded 31.8 million mt.
3. Benefiting from the focus on ultra-high voltage, power transmission, and transformation projects in power grid investment and tenders, combined with the widening SHFE/LME price ratio, the trend of aluminum as a substitute for copper intensified this year. Various degrees of aluminum replacing copper were observed in industries such as PV, wind power, home appliances, and construction, significantly boosting demand for aluminum wire and cable, attracting substantial capital into the aluminum rod industry, and accelerating the commissioning of new capacity.
