Recently, China's aluminum bar sector has been challenged by the off-season impact coupled with high temperatures, leading to shrinking orders and declining operating rates at downstream enterprises. The industry's overall operation has shown a slow, sluggish pace, which in turn has directly caused the bar market to struggle.
In June, stimulated by both falling aluminum prices and supply contraction, the traders were increasingly firm to the offers, with daily quotations continuously climbing. By late June and early July, processing fees for 6063 aluminum bars in major consumption areas had already broken through the Yuan 600/tonne mark, and some high-end quotations were even eager to test the Yuan 1,000/tonne threshold. In July, expectations of further increases in processing fees were dashed. With aluminum prices bottoming out, supply increasing, and demand weakening, the upward momentum of aluminum bar processing fees was blocked, and a downward channel opened.
As of July 27, 2026, according to Mysteel's data, the monthly average processing fee in the Foshan market has already shown a nearly 20% month-on-month decline. Although the Wuxi and Nanchang markets still appear to be rising month-on-month in terms of numerical comparison, the trajectory of processing fees oscillating downward since early July has been relatively clear.
Meanwhile, feedback on inflated spot market quotations and a nominal market with few actual transactions has been endless, which also fuels rising expectations of subsequent downward trends in processing fees in these two regions.
In June, the traders' inventories of domestic aluminum bar continued to draw down. Starting from mid-July, the traders' inventories as a whole shifted from destocking to restocking. As of today, according to Mysteel's data, the total traders' inventory of domestic aluminum bar stood at 128,500 tonnes, up 2.39% week-on-week.
Looking at the daily changes in the traders' inventories of aluminum bar across Foshan, Wuxi, and Nanchang, the Foshan area took the lead in initiating inventory buildup. Recently, there have been gradual signs of increasing traders' inventories of aluminum bar in the Wuxi area, while inventories in Nanchang have generally remained stable.
According to Mysteel data, during the week of July 20-27 of 2026, the weekly outbound volume from domestic traders' inventories of aluminum bar was 39,000 tonnes, a decrease of 1,800 tonnes week-on-week. As mentioned earlier, processing fees have turned to a weakening trend, but outbound volumes have not shown any supporting performance.
On the contrary, the digestion process of traders' inventories of aluminum bar continues to slow, more intuitively reflecting the current lack of consumer demand. As of last week, according to Mysteel statistics for aluminum profile sample enterprises, the average capacity utilization rate fell to 38.44%.
High temperatures in the off-season have left downstream enterprises short-handed on orders, resulting in a significant drop in manufacturers' motivation to start production. This has greatly weakened the enthusiasm of commercial enterprises to purchase aluminum bars.
In daily spot trading, numerous sellers actively quote and adjust prices, but buyer response is limited. Downstream enterprises have low purchasing sentiment, typically buying only small amounts based on rigid demand and bargaining down prices. Stockpiling moves are relatively rare, and raw material inventories at downstream factories continue to decline.
In July, when aluminum prices rose, processing fees struggled to follow; when aluminum prices fell, processing fees followed suit. Supply and demand matching remains worrisome, and it is expected that August will see little improvement.
Written by Regina WANG
wangjiaqie@mysteel.com
