The price of the main contract of the aluminum alloy futures has recently dropped significantly after reaching a high of 24,410 yuan/ton last Friday. On one hand, the precious metals market witnessed a "catastrophic" decline, which quickly spread panic throughout the entire有色金属 sector， leading to capital outflows and the concentrated liquidation of long positions. On the other hand， due to the rising expectations that the US Federal Reserve's monetary policy might shift towards a "hawkish" stance， the US dollar strengthened， thereby suppressing the prices of commodities priced in US dollars.
Waste aluminum raw materials: A tight balance under the dual increase of domestic recycling and imports
Under the joint promotion of policies and the market, the Chinese scrap aluminum market in 2025 generally showed a trend of increasing volume and stable prices. The domestic recycling system continued to expand, while imports remained strong to supplement the raw material supply.
According to SMM data, the domestic recycled aluminum volume will increase significantly in 2025, reaching 859.27 million tons throughout the year, with a year-on-year growth of 14.6%. Among them, the monthly recycled volume in December was 82.1 million tons, a significant increase of 28.08% compared to the previous year. This is mainly attributed to the continuous improvement of the domestic recycled resource recovery network, the advancement of front-end classification and dismantling technologies, and the increased systematic development efforts for "urban mines". However, the growth in the recycled volume has not alleviated the overall tight balance in the market. The price of recycled aluminum remains firm due to the rigid demand from downstream recycled aluminum production capacity, the structural shortage of some high-quality scrap materials, and the high cost support from primary aluminum.
To make up for the domestic supply gap, the import volume of scrap aluminum in China has also increased simultaneously. According to SMM data, the total import volume of scrap aluminum for the whole year of 2025 was 2.01 million tons, with a year-on-year growth of 11.67%. By the end of 2025, the import growth rate further accelerated. In December, the import volume was approximately 194,100 tons, with a环比 growth of 19.36% and a year-on-year growth of 22.82%. The growth in imports was mainly driven by three factors： first， the policy encouraging the import of high-quality recycled raw materials provided a stable expectation； second， the continuous release of domestic recycled aluminum capacity formed a strong pull； third， the stabilization of aluminum prices at a high level stimulated the demand for replenishment by enterprises.
Entering January, the scrap aluminum market presented a typical "valuable but no market" situation. According to SMM data, as of January 29th, although the price of scrap aluminum rose significantly along with the price of primary aluminum (SMM A00 aluminum price rose by 550 yuan/ton per week to 24,660 yuan/ton, and the price of packaged beverage cans also rose, reaching 17,650 - 18,150 yuan/ton), actual transactions were still sluggish. The root cause lies in the "weak supply and demand". The supply side saw a sharp decline in liquidity due to tax and fiscal policy adjustments, coupled with the significant tightening of cargo yards before the holiday; the demand side was suppressed by environmental protection production restrictions and the rapid rise in aluminum prices, and the purchasing willingness dropped to an all-time low. It is expected that the short-term scrap aluminum market will maintain a high-level fluctuation. Although the high price of primary aluminum and the restricted circulation constitute bottom support, the low demand and repeated environmental protection production restrictions will continue to intensify market competition, and the "valuable but no market" situation of scrap aluminum is unlikely to be broken.
Renewable aluminum industry: Seasonal differentiation intensifies
From the end of 2025 to the beginning of 2026, the domestic recycled aluminum alloy market presented a complex picture at both the import and domestic production ends. The import volume overall contracted in 2025, but there was a brief rebound at the end of the year; the domestic recycled aluminum alloy industry entered a seasonal off-season, and its internal structure became significantly differentiated.
According to customs data, China's cumulative imports of unaltered aluminum alloys reached 1007.3 thousand tons in 2025, a decrease of 17.0% compared to the previous year. This downward trend was mainly due to the inverted import prices throughout most of the year, especially from July to November 2025. Overseas costs and policy-driven prices rose, while domestic prices lagged behind, resulting in continuous losses in imports and dampening the enthusiasm of traders. However, in December 2025, imports reached 93.1 thousand tons, an increase of 27.2% compared to the previous month. This rebound was mainly driven by short-term factors: first, the base was relatively low in the previous period; second, the import arbitrage window reopened in late December. It is expected that the import volume will continue to increase环比 in January.
At the same time, the domestic recycled aluminum industry has entered a traditional off-season period, and internal differentiation has intensified. According to SMM data, in December 2025, the domestic production of recycled aluminum ingots was 640,400 tons, a decrease of 6.16% compared with the previous month and a slight increase of 1.27% year-on-year. The market presented a pattern of "big factories being well-supplied while small factories are halted". In January, the off-season characteristics became more obvious. Although the price of primary aluminum remained high, the cost could not be smoothly passed on to the midstream and downstream. Casting enterprises suffered from the rigidity of terminal order prices, resulting in a squeezed profit margin, low purchasing willingness, and widespread delay in stock preparation. In addition, the supply of scrap aluminum remained tight. Even though it was close to the Spring Festival, recycled aluminum enterprises were cautious in their stock preparation, and overall inventory only slightly accumulated. Under the dual pressure of weak demand and raw material constraints, the operating rate of the recycled aluminum industry continued to decline. According to SMM data, as of the week ending January 29, the operating rate of the recycled aluminum industry dropped to 58.9%, a slight decrease of 0.4 percentage points compared with the previous month, and it is expected that the operating rate will further decline before the Spring Festival.
In terms of inventory, there is a differentiated trend: the social inventory of recycled aluminum ingots in the domestic market has been continuously decreasing, while the factory inventory has been passively accumulated. Specifically, the social inventory has been continuously declining since mid-November 2025. As of January 29, the social inventory was 46,400 tons, a decrease of 11,000 tons compared with the previous week. Meanwhile, the factory inventory has increased. As of February 2, the raw material inventory was 41,100 tons and the finished product inventory was 21,500 tons. Against the backdrop of weakening demand, the arrival of raw materials has led to a passive accumulation, while the sales speed of finished products has slowed down.
Weak fluctuations will be the main trend.
Looking ahead, it is expected that the futures price of cast aluminum will mainly exhibit a weak and fluctuating trend. The upward potential and independence of the price are both constrained. The core lies in the continuous negotiation between the firm cost support and the weak basic demand. The firm cost support is the fundamental reason why the price cannot deeply decline. On one hand, the supply of core raw material scrap aluminum remains tight and the price is firm; on the other hand, the key price benchmark - the price of primary aluminum is above 24,000 yuan per ton, jointly forming a solid cost bottom line. In addition, the holiday before the Spring Festival will also temporarily tighten supply. However, the weak demand severely restricts the upward space of the price. The terminal demand is suppressed by the dual factors of the seasonal off-season and the high aluminum price, resulting in the poor transmission of cost to the downstream, and the market presents a typical "valuable but no market" state. Therefore, the price is difficult to break away from cost-driven to form an independent upward trend. The key to the future trend lies in the intensity of the above two forces' negotiation.
