As of August 31, the monthly average price for A00 aluminum ingots was Yuan 23,869.0/tonne in East China, up 3.34% MoM; Yuan 24,010.0/tonne in South China, up 3.79% MoM; and Yuan 23,762.4/tonne in Central China, up 3.42% MoM, based on Mysteel's assessment.
In August, China's aluminum prices fluctuated widely under the shifting macro expectations and tight spot supply, with the monthly average price rising noticeably compared to July.
Early in the month, improved overseas macro expectations and a periodic weaker US dollar, coupled with continuous destocking of domestic traders' inventory, drove a rapid rebound in SHFE aluminum prices.
Mid-month prices briefly surged but subsequently retreated and consolidated as US inflation data and rate hike expectations repeatedly unsettled the market, while downstream buyers grew increasingly wary of high prices.
Entering late August, aluminum prices strengthened once again, supported by low inventories, high molten aluminum ratios, and expectations for peak-season demand.
Looking at the full month, financial attributes drove short-term price fluctuations, but supply-side rigid constraints and continuous destocking in the spot market remained the core factors supporting the upward shift in the aluminum price center.
Supply Side
According to a full-sample survey of Chinese primary aluminum producers by Mysteel, China's primary aluminum output in August 2026 stood at 3.88 million tonnes, up 2.41% YoY and up 0.02% MoM (based on 31 actual production days); the average daily output of primary aluminum was 125,100 tonnes, roughly flat MoM.
In August, domestic operating capacity for aluminum remained generally stable, with limited room for new supply. Future incremental supply will depend mainly on the commissioning of replacement capacity and the progress of technical renovation projects.
According to Mysteel statistics, the average spread between primary aluminum and aluminum scrap in August was Yuan 867/tonne, widening by Yuan 262/tonne compared to July. On the one hand, the overall upward movement in aluminum prices prompted scrap traders to shift from holding back to selling; as traders became more willing to sell in line with rising prices, the supply of aluminum scrap increased.
On the other hand, August coincided with the traditional consumption off-season; operating rates at downstream processing enterprises were relatively low, and procurement demand for aluminum scrap was weak. This pattern of rising supply and weakening demand caused scrap prices to lag significantly behind primary aluminum prices, further widening the primary-scrap spread.
Demand Conditions
According to Mysteel's data, the weekly average output of primary aluminum-based semi-finished products in August was 611,600 tonnes, essentially flat compared to July. By category, aluminum bar supply remained at high levels. The extrusion sector was restrained by multiple factors including high temperatures, weak construction demand, and high aluminum prices, prompting enterprises to adopt a more cautious approach toward operating rates and raw material procurement, with processing fees generally under pressure.
Against the backdrop of the traditional off-season, output of cast-rolled coils and slabs edged lower; orders for common plate, strip, and packaging foil feedstock were lackluster, with the market largely driven by long-term contract and few new spot orders. In contrast, orders for battery aluminum foil demonstrated strong resilience. For aluminum rod, earlier surging export orders had boosted production efficiency, but as aluminum prices rose and outstanding orders were gradually delivered, the pace of new order inflows slowed, leading to a subsequent decline in output.
End-use demand continued to show a structurally diverging trend. Demand for architectural extrusions remained relatively weak, affected by sluggish real estate new starts and high temperatures. At the same time, demand from sectors such as automotive lightweighting, power grid construction, energy storage, and new energy remained resilient. Growth in EV production and sales, the advancement of power grid investment, and the strong sentiment across the energy storage industry chain provided solid support for orders of aluminum rods, plate, strip, foil, and battery foil.
Export performance also remained strong; according to the latest statistics from the General Administration of Customs (GACC), China's exports of unwrought aluminum and aluminum products in August totaled 626,000 tonnes, down 2.6% MoM but still at a relatively high level overall, with external demand providing sustained support for domestic aluminum product consumption. In summary, August aluminum end-use demand did not exhibit a typical off-season contraction; overall demand resilience persisted, and the aluminum consumption structure continued to tilt further toward emerging sectors.
Inventory
In August, domestic aluminum inventories continued to destock in an anti-seasonal manner. Mysteel statistics show that as of August 31, China's traders' inventory of aluminum stood at 809,000 tonnes, down 122,000 tonnes MoM; inventories at aluminum plants fell to 57,000 tonnes, down 13,000 tonnes MoM; and monthly outflows rose to 699,000 tonnes. The molten aluminum ratio in August was 77.38%; although slightly lower than in July, it remained at a high level, continuing to suppress ingot casting volumes and traders' inventory inflows. Traders' inventories of aluminum bars rose to 147,500 tonnes, while plant inventories increased to 107,500 tonnes, reflecting weak demand in the extrusion sector and mounting pressure on aluminum bar destocking.
As of the end of August 2026, SHFE aluminum inventories had fallen by 78,500 tonnes from the end of July to 241,700 tonnes. Based on changes in primary aluminum supply, net imports, apparent consumption, and inventories of aluminum ingots and aluminum bars in August, the Mysteel monthly report estimates a theoretical domestic primary aluminum supply gap of approximately 80,000 tonnes, indicating that supply and demand remain in a relatively tight pattern.
Outlook
Entering September, aluminum prices are expected to fluctuate amid a tug-of-war between peak-season demand realization, inventory destocking, and overseas macro disturbances.
On the supply side, domestic operating capacity for aluminum remains generally elevated. On the demand side, as the impact of high temperatures gradually fades, operating rates at construction sites and downstream processing enterprises are expected to see a seasonal recovery. At the same time, sectors such as power grid investment, energy storage, EVs, and automotive lightweighting continue to exhibit strong demand. Orders for sub-sectors including aluminum rods, plate, strip, foil, and battery foil should remain resilient, and export demand is also expected to provide incremental support.
In terms of inventories, the current high molten aluminum ratio and relatively limited pressure on visible aluminum ingot inventories mean that if peak-season consumption improves further, there is still room for additional destocking in traders' inventory; the low inventory pattern enhances the support of the spot side for futures prices. At the macro level, close attention must be paid to Fed policy signals, US inflation and employment data, and fluctuations in the US dollar index, while geopolitical factors such as the situation in the Middle East may affect non-ferrous metal pricing through crude oil, the US dollar, and global risk sentiment.
Overall, the fundamentals of the aluminum market in September remain supportive; peak-season demand, low inventories, and demand resilience in emerging sectors are expected to underpin prices. The SHFE aluminum main contract is projected to trend sideways but with a bullish bias, with a forecast trading range of Yuan 24,000-25,000/tonne.
Written by Regina WANG
wangjiaqie@mysteel.com
