The Proportion of Liquid Aluminum in January Declined, Expected to Face a Significant Drop in February [SMM Analysis]

SMM January 30 News:

According to SMM statistics, China's aluminum production in January 2026 (31 days) increased by 2.7% YoY and 0.5% MoM.

Overall downstream operating rates trended downward during the month, and the proportion of liquid aluminum also declined, dropping 4.4 percentage points MoM to 72.1%, a decrease larger than initially expected. The main reasons include: 1) Demand had not yet recovered due to the off-season impact, coupled with some downstream enterprises starting their Chinese New Year break early; 2) Aluminum prices generally fluctuated at highs in January, putting pressure on downstream profit margins, leading to an overall decline in operating rates; 3) Repeated environmental protection-driven production restrictions in some regions constrained raw material demand. Based on SMM's liquid aluminum proportion data, China's aluminum casting ingot volume in January decreased by 5.9% YoY but increased by 19.4% MoM.

Capacity Changes: As of the end of January, SMM statistics show China's existing aluminum capacity was approximately 46.209 million mt, and operating aluminum capacity was approximately 44.996 million mt.

Production Forecast: Entering February 2026, aluminum production is expected to decrease MoM due to fewer calendar days. Additionally, some new aluminum projects are expected to steadily commence and ramp up production. Regarding the liquid aluminum proportion, with the Chinese New Year approaching, downstream demand for raw materials is marginally weakening. Combined with the impact of high aluminum prices suppressing demand, downstream demand is further weakening marginally, and enterprises' willingness to cast ingots has significantly increased. The liquid aluminum proportion is expected to decrease significantly by 7.7 percentage points to 64.4%.

[Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and do not constitute decision-making advice.]

Data Source: SMM