China aluminium spot prices extend decline on persistent oversupply, holiday lull

China's domestic aluminium spot prices edged lower last week, with trading sentiment remaining relatively subdued during the National Day holiday period.

On supply side, China's domestic aluminium operating capacity currently stands at approximately 99.9 million tonnes per year. A coastal aluminium refinery in Guangxi commenced calciner maintenance around October 4, expected to last about one month, affecting capacity of roughly 1 million tonnes per year. However, newly commissioned and restarted capacity from earlier periods has gradually translated into stable incremental supply.

Coupled with expectations of further new capacity releases in the fourth quarter, the impact of sporadic routine maintenance on market sentiment remains limited. Two new projects, one coastal and one inland in Guangxi, collectively commenced production of approximately 1.8 million tonnes last month, bringing the province's total operating capacity to about 22.5 million tonnes per year. The "south-to-north shipment" channel continues to expand, now reaching northwest China in addition to the northeast, which may exert sustained pressure on northern markets going forward.

Last week's price decline was primarily driven by an unchanged high-supply landscape, leaving the market in a wait-and-see mode. Spot transactions remained concentrated between traders and smelters, with downstream aluminium producers adopting a dip-buying strategy. Some tender-based transactions continued to drift lower.

As of last Thursday (October 9, 2026), national aluminium capacity utilisation was 83.05 per cent, down 0.56 percentage points week-on-week. As remaining new capacity is gradually released through the end of the year, bearish sentiment persists, with some traders adopting a cautious pricing stance. By region, spot availability in the north remains moderate, while supply in the southwest is relatively loose. Widening price spreads and narrowing freight differentials have expanded cross-regional sales radius.

Domestic aluminium traders' inventories stood at 7.01 million tonnes, up 68,000 tonnes week-on-week. Post-holiday restocking by downstream buyers was slow, with some refineries experiencing pile-ups. Long-term contract execution remains active, while raw material inventories at aluminium smelters continued to edge higher.

According to Mysteel, domestic aluminium plants consumed approximately 1.68 million tonnes of aluminium last week, largely flat week-on-week. Operating capacity of domestic aluminium smelters remains at around 45.42 million tonnes per year, with overall raw material inventories ample and spot procurement sentiment muted.

Recent capacity additions and maintenance in southern China have coexisted, but no concentrated production cuts have emerged. Entering the fourth quarter, the market has begun inquiring about next year's long-term contracts. Despite mounting losses, refineries remain strongly committed to maintaining stable output to secure contract share.

Some downstream smelters and traders believe the downside for spot prices is narrowing, with risks of scaled production adjustments ahead. Recent futures price volatility has boosted fixed-price transaction activity, though transacted prices remain on a downward trend. In the short term, oversupply pressures show no signs of abating. Domestic spot aluminium prices are expected to continue their soft performance next week, with a forecast trading range of RMB 2,500–2,650 per tonne.

Note: This article has been shared by Mtsteel and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.