June Aluminum Liquid Aluminum Proportion Increase Exceeded Expectations, July Expected to Edge Up [SMM Analysis]

SMM, June 30:

According to SMM statistics, in June 2026 (30 days), China’s aluminum production rose 2.2% YoY but fell 3.1% MoM. Although weak domestic demand dragged down various sectors generally under pressure, export demand for aluminum semis provided effective support for domestic liquid aluminum consumption. The domestic proportion of liquid aluminum edged up, with the liquid aluminum share rising 0.7 percentage points MoM to 77.2% in the month, slightly outperforming expectations at the beginning of the month. The core increase came from attractive processing margins for some products, which boosted demand for liquid aluminum.

Based on SMM’s liquid aluminum proportion calculations, China’s aluminum casting ingot volume in June fell 3.8% YoY and 6.2% MoM.

Capacity changes: As of end-June, SMM estimated China’s existing aluminum capacity at approximately 46.289 million mt, up 0.17% MoM.

Production forecast: Entering July 2026, the price spread between aluminum in and outside China narrowed, squeezing arbitrage profits on aluminum semis exports. However, previously finalized export orders still need to be concentrated for fulfillment, providing a floor for overall aluminum semis exports. Additionally, downstream processors’ attractive processing margins are driving up their willingness to purchase directly supplied liquid aluminum. Overall, the proportion of liquid aluminum is expected to rise 0.4 percentage points to 77.6%.

[Data source statement: All data other than public information are processed by SMM based on public information, market communication, and SMM’s internal database models, for reference only and do not constitute decision-making advice.]

Data source: SMM