After breaking through the psychological threshold of RMB 22,000 per tonne in mid-November, aluminum prices experienced a modest pullback but remained largely resilient. With a fundamentally bullish market outlook, aluminum is expected to maintain a strong trading trend in the near term.
In 2017, China implemented supply-side structural reforms in the electrolytic aluminum sector, setting a national production cap of 45 million tonnes. As of October 2025, China’s operating electrolytic aluminum capacity stood at 44.434 million tonnes—approaching this ceiling and leaving minimal room for further expansion. This hard cap provides robust underlying support for aluminum prices. Over the medium to long term, the 45-million-tonne limit is unlikely to be breached, keeping electrolytic aluminum supply stable around this level.
From a supply structure perspective, primary aluminum ingot output remains relatively low. According to data from Shanghai Metals Market (SMM), China produced 3.7421 million tonnes of electrolytic aluminum in October 2025, up 1.13% year-on-year. Of this, molten aluminum (used directly in downstream processing) accounted for 77.7%, while standard aluminum ingots—the deliverable grade for China’s aluminum futures contracts—represented only 22.3%. This low ingot ratio tightens the availability of exchange-eligible material, helping sustain low inventory levels and reinforcing price support.
Overall, the policy-imposed capacity ceiling restricts supply growth, and the current dominance of molten aluminum over ingot production further strengthens the bullish fundamentals on the supply side.
Electrolytic aluminum demand is primarily driven by three sectors: construction (30%), transportation (20%), and power (16%).
Construction: The property market remains in a recovery phase. From January to October 2025, sales of commercial housing totaled 719.82 million m², down 6.8% year-on-year, while completed floor area reached 348.61 million m², a 16.9% decline. Despite continuous government support measures since 2022, cautious consumer sentiment—impacted by post-pandemic effects and macroeconomic cycles—has limited rebound momentum.
Transportation: This sector shows solid resilience. In October, China produced and sold 3.359 million and 3.322 million vehicles, respectively—up 12.1% and 8.8% year-on-year. Cumulative production and sales for January–October reached 27.692 million and 27.687 million units, rising 13.2% and 12.4% respectively. Vehicle exports also surged: 666,000 units were shipped in October (+22.9% YoY), with 5.616 million units exported in the first ten months (+15.7% YoY).
Notably, new energy vehicles (NEVs) consume significantly more aluminum due to lightweighting requirements—220–300 kg per vehicle, compared to 150–200 kg for internal combustion engine (ICE) cars. In October, NEV production and sales hit 1.772 million and 1.715 million units, up 21.1% and 20.0% year-on-year, accounting for 51.6% of total auto sales. For January–October, NEV sales totaled 12.943 million units (+32.7% YoY), representing 46.7% of the market. NEV exports were especially strong: 256,000 units in October (+99.9% YoY), and 2.014 million units for the year-to-date (+90.4% YoY).
Photovoltaics (PV): Aluminum demand from the solar industry remains robust, as aluminum alloys are essential for PV module frames and mounting structures. From January to October 2025, China added 252.87 GW of new solar capacity—a 39.48% increase year-on-year—with 12.6 GW installed in October alone, up 30.43% month-on-month.
Collectively, the rapid growth of NEVs and photovoltaics has effectively offset weakness in construction-related aluminum consumption. Moreover, aluminum applications continue to expand into emerging fields such as energy storage, humanoid robotics, low-altitude economy (e.g., eVTOLs), smartphones, and winter sports equipment—all of which rely heavily on aluminum as a core material. Over the medium to long term, the market is poised for stable supply and growing demand.
As of November 24, social inventories of electrolytic aluminum across five key Chinese regions tracked by SMM stood at 612,000 tonnes—down 7,000 tonnes from the previous week and slightly above the 555,000 tonnes recorded a year earlier. The combination of low ingot ratios and strong industrial demand for extruded profiles has kept social stocks at historically low levels, providing consistent support to prices.
On the supply side, the clear capacity ceiling and low proportion of tradable aluminum ingots create a structurally supportive environment. On the demand side, although the construction sector remains sluggish, robust growth in NEVs, photovoltaics, and other high-tech industries is driving strong aluminum consumption.
Given these favorable fundamentals, aluminum prices are likely to maintain a bullish bias in the coming period.
