Analysis of Operational Characteristics and Market Conditions in the Aluminum Industry

In January, the aluminum smelting industry’s business climate remained in the lower half of the normal range, with the following key characteristics: First, aluminum prices declined year-on-year but rose month-on-month. Throughout the month, aluminum prices generally trended upward, driven by optimistic expectations in overseas markets and a series of domestic policies aimed at stabilizing the economy and the real estate sector. Over the course of January, the Shanghai aluminum benchmark continued to move higher, posting consecutive gains and breaking through RMB 19,000 per tonne by month’s end. The main Shanghai aluminum contract traded between RMB 17,637 and RMB 19,363 per tonne, with an average price of RMB 18,500 per tonne—up RMB 260 per tonne, or 1.4%, from the previous month, and down RMB 2,604 per tonne, or 12.3%, year-on-year.

In January, the aluminum smelting industry’s overall business climate remained in the lower end of the normal range, with the following key characteristics: First, aluminum prices declined year-on-year but rose month-on-month. Throughout the month, aluminum prices generally trended upward, driven by optimistic expectations in overseas markets and a series of domestic policies aimed at stabilizing the economy and the real estate sector. Over the course of January, the Shanghai aluminum price center of gravity continued to move higher, exhibiting a sustained upward momentum and breaking through RMB 19,000 per tonne at month-end. The main Shanghai aluminum contract traded between RMB 17,637 and RMB 19,363 per tonne, with an average price of RMB 18,500 per tonne—up RMB 260 per tonne, or 1.4%, from the previous month, and down RMB 2,604 per tonne, or 12.3%, year-on-year.

Second, overall production remained stable. In December 2022, national output of primary aluminum and alumina was broadly steady. Domestic primary aluminum capacity saw both increases and decreases: in regions such as Sichuan and Guangxi, smelters are actively resuming operations, while the Zhongrui primary aluminum project in Gansu is progressing steadily toward commissioning. Meanwhile, Guizhou has implemented production‑cutting measures due to tight power supplies, reducing capacity by more than 600,000 tonnes. In Yunnan, with the onset of the dry season, output has been curtailed by approximately 1.15 million tonnes—about 22% of the region’s operating primary aluminum capacity—and further reductions are expected, potentially expanding to 35%–40%. In December 2022, national primary aluminum production totaled 3.434 million tonnes, up 10.3% year on year; average daily output stood at 111,000 tonnes, down 2,000 tonnes month on month but up 11,000 tonnes year on year. Alumina output reached 6.521 million tonnes, a 4.4% year‑on‑year increase, with an average daily output of 210,000 tonnes—down 22,000 tonnes month on month but up 9,000 tonnes year on year.

Third, domestic apparent aluminum consumption fell short of expectations. Although pandemic control policies have been significantly adjusted, market recovery will still take time. Downstream demand has underperformed, with the aluminum processing sector entering the off-season ahead of schedule. New orders at the end‑user level have declined markedly, while the real estate sector remains sluggish, erasing the traditional fourth‑quarter peak season. Orders for architectural aluminum profiles have recovered slowly, posting a substantial year‑on‑year drop; in the automotive sector, production and sales have shown signs of weakness, with both month‑over‑month and year‑on‑year declines, reflecting a clear downward trend; meanwhile, output of aluminum alloys and aluminum products has also fallen compared with the same period last year. Overall, end‑user demand has weakened noticeably. Looking at key sectors, in real estate, nationwide real estate development investment totaled RMB 903.24 billion in December 2022, down 15.6% year on year; the floor space under construction by real estate developers stood at 814.28 million square meters, a 48.2% year‑on‑year decline; new housing starts amounted to 89.55 million square meters, down 44.3%; and completed housing reached 305.14 million square meters, a 6.6% year‑on‑year decrease. In the automotive sector, January 2023 saw lackluster performance, with both production and sales registering double-digit declines month over month and year over year—1.594 million and 1.649 million vehicles, respectively—down 33.1% and 35.5% month over month, and 34.3% and 35% year over year. In December 2022, national aluminum product output totaled 5.615 million tonnes, down 6.9% year on year, while aluminum alloy output reached 1.049 million tonnes, a 7.6% year‑on‑year decline.

Fourth, bauxite imports increased year on year, while aluminum product exports declined compared with the same period last year. Due to unfavorable domestic bauxite endowments, China continues to run a net import balance for aluminum resources. In terms of bauxite imports, China’s bauxite imports have maintained an upward trend. In December 2022, China imported 10.14 million tonnes of bauxite and alumina concentrates, down 5.7% month-on-month but up 16.9% year-on-year. Specifically, imports from Guinea totaled 6.20 million tonnes, down 0.8% month-on-month but up 76.1% year-on-year; imports from Australia reached 2.72 million tonnes, down 3.9% month-on-month but up 6.6% year-on-year; and imports from Indonesia amounted to 1.00 million tonnes, down 62.0% month-on-month and 25.6% year-on-year. Regarding aluminum products, China continues to pursue a development model characterized by domestic circulation as the mainstay, supported by mutually reinforcing domestic and international circulations. In December 2022, China exported 451,000 tonnes of unwrought aluminum and aluminum products, down 12.4% month-on-month and 18.4% year-on-year.