July’s increase in aluminum’s proportion of liquid aluminum exceeded expectations, and August is expected to edge up [SMM Analysis]

SMM July 31 news:

According to SMM statistics, China's aluminum production in July 2026 (31 days) increased 1.6% YoY and 3.5% MoM. Domestic demand was weak, and combined with a pullback in export orders for some downstream products, all industry chain segments were under pressure; however, driven by high processing fees for aluminum rod and billet, downstream procurement demand for liquid aluminum rose, pushing the proportion of liquid aluminum output in China higher. The proportion of liquid aluminum in the month rose 1.1 percentage points MoM to 78.3%, slightly exceeding expectations at the start of the month, with core growth coming from strong processing profits for some products, leading to higher-than-expected demand for liquid aluminum.

Based on SMM's proportion of liquid aluminum calculations, China's aluminum casting ingot production in July fell 15.1% YoY and 1.4% MoM.

Capacity changes: As of month-end July, SMM statistics showed China's existing aluminum capacity was approximately 46.29 million mt, flat MoM.

Production forecast: Entering August 2026, the traditional off-season for downstream continues, and demand for most downstream products is expected to further weaken. However, some primary processed material orders are performing well, boosting downstream enterprises' willingness to purchase liquid aluminum directly. Overall, the proportion of liquid aluminum is expected to rise 0.2 percentage points to 78.5%.

[Data source statement: All data except public information is processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and not as investment advice.]

Data source: SMM