The sustained high aluminium prices have suppressed consumption, coupled with a stronger off-season atmosphere downstream, leading to weak end-use demand across various sectors. Aluminium billet destocking has been sluggish, resulting in an inventory buildup turning point. Aluminium billet processing fees have "plummeted" amid already challenging conditions, with the supply-demand pattern gradually collapsing. Some consumption regions have even witnessed "zero processing fees" or "negative processing fees" scenarios, placing aluminium billet producers under severe inventory and capital pressure.
Consequently, the aluminium billet production cut wave has intensified, evolving from marginal production cuts at the beginning of June to large-scale production halts and cuts in multiple regions by the end of June and early July. The scale of aluminium billet production cuts continued to expand slightly in mid-July, with some billet plants choosing to resume production only in late July. In the past two months, the domestic proportion of liquid aluminium has encountered significant resistance in surging, with the daily average production of domestic primary aluminium billets in June remaining flat with May at around 49,000 tonnes per day. However, it is expected that this figure will sharply decrease to 44,000 tonnes per day in July.
Let's first look at the June data. According to SMM's monthly survey statistics, there are currently 173 enterprises in SMM's monthly survey sample for primary aluminium billets, with a total capacity of 31.805 million tonnes, unchanged from the previous month. In June 2025 (30 days), the total national production of primary aluminium billets was 1.465 million tonnes, a decrease of 44,000 tonnes or 2.9 per cent compared to May 2025 (31 days), and an increase of 41,000 tonnes or 2.9 per cent compared to the same period last year. The operating rate of domestic primary aluminium billets in June was 55.3 per cent, a decrease of 1.6 per cent M-o-M. Regionally, affected by marginal production cuts in June, production in major aluminium billet-producing provinces such as Shandong, Inner Mongolia, Yunnan, and Guangxi has shown a downward trend. However, provinces like Ningxia, Henan, and Xinjiang have seen production rise against the trend due to reaching full production targets and increasing new capacity in H1.
