The storm gradually subsided! The final scale of primary aluminium billets production cuts in July was lower than expected, with a smooth resumption pace in August. Three main reasons contributed to this: (1) Aluminium prices hovered at highs during the off-season, and the adaptability of the industry chain to high aluminium prices strengthened; (2) Aluminium smelters adopted a clear stance, leaving limited room for aluminium billet producers to halt or cut production; (3) After the production cut turmoil, the centre of processing fees slightly rose, easing financial pressure on aluminium billet enterprises.
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Image source: https://www.chaluminium.com/
Looking back at the earlier production cut turmoil, it started with marginal cuts in early June, escalated into regional large-scale halts and reductions by late June and early July, and continued to expand slightly until mid-July. Only in late July did some billet plants choose to resume production, while August overall saw a smooth resumption pace. The daily average production of primary aluminium billets in July decreased by 4,000 tonnes M-o-M to around 45,000 tonnes per day but remained slightly higher than the expected 44,000 tonnes per day. August’s daily average production is expected to rebound to 47,000 tonnes per day.
First, examining the final statistics of July’s aluminium billet production cuts: According to the SMM monthly survey, the current sample covers 173 enterprises with a total capacity of 31.805 million tonnes, flat M-o-M. In July 2025 (31 days), China’s total primary aluminium billet production was 1.408 million tonnes, down 57,000 tonnes (3.9 per cent) M-o-M from June 2025 (30 days) and down 19,000 tonnes (1.3 per cent) YoY. The operating rate for primary aluminium billets in July was 53.1 per cent, down 2.2 per cent M-o-M.
Regionally, Qinghai, Henan, Inner Mongolia, Guangxi, and Xinjiang saw the largest production declines due to expanded cuts, while Shandong, Yunnan, Guizhou, and Ningxia experienced relatively controllable reductions. Meanwhile, Gansu and Sichuan bucked the trend with rising production. Final statistics show that July’s actual output exceeded expectations by 44,000 tonnes, and the operating rate was 1.3 per cent higher than expected, indicating a smaller-than-anticipated scale of production cuts.
What about August’s production forecast? Has full resumption been achieved? Based on SMM’s latest survey of aluminium billet enterprises across provinces (after desensitisation), August’s (31 days) primary aluminium billet production is estimated at 1.462 million tonnes, up 54,000 tonnes (3.8 per cent) M-o-M from July 2025, with the operating rate rebounding 2.1 per cent to 55.2 per cent. However, it was down 51,000 tonnes (3.8 per cent) Y-o-Y. As the aluminium billet market stabilised in August, most provinces saw production rebound, except for Gansu and Chongqing, where output dipped slightly due to minimal earlier cuts. Inner Mongolia, Yunnan, Guangxi, Qinghai, Sichuan, and Shanxi are expected to post growth exceeding 5 per cent.
By late August, SMM learned that some previously halted or reduced aluminium billet enterprises in south-west China (e.g., Yunnan and Guangxi) had completed maintenance and resumed production smoothly, driving a weekly operating rate rebound. SMM survey data show that late August’s in-plant aluminium billet inventory stood at 93,000 tonnes, down 22,000 tonnes M-o-M, with average days of inventory dropping 0.4 day to 1.9 days. SMM expects that recent destocking (in-plant and social inventories) signals a clear recovery in market consumption, indicating the off-season has largely passed. However, outflows from warehouses suggest the peak season has yet to arrive, and end-user demand must still drive consumption.
Aluminium billet processing fees are expected to remain below RMB 300 per tonne in the short term, potentially breaking the RMB 300 threshold after the peak season returns.
Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.
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