In the first half of 2026, China’s domestic cast aluminium alloy prices initially surged and created a multi-year high before pulling back. By end-June, the spot prices in East China stood at RMB 23,200 per tonne, up 18.37 per cent year-on-year, having hit a record high of RMB 24,700 per tonne during the period.
The price rally was driven by three main factors. First, overseas geopolitical tensions pushed up global aluminium prices, lifting domestic A00 prices and alloy prices in tandem.
Second, tighter tax enforcement, including the suspension of reverse invoicing (note: reverse invoicing is a method where the buyer issues the invoice to the seller, primarily to address the missing of VAT deduction document caused by unregistered individual sellers) for aluminium scrap in many regions, constrained input tax credits for secondary aluminium producers, leading to significant output cuts.
Third, the closed import window due to higher overseas aluminium prices limited domestic scrap imports, forcing some import-dependent smelters to scramble for domestic scrap, exacerbating the shortage.
When cast aluminium alloy prices created new highs in the first half, the profitability saw sharp swings in the first half. Margins opened the year at their highest levels, then steadily eroded as raw material shortages intensified, at times falling to near break-even, before recovering modestly after reverse invoicing was suspended in some regions. That is, margins declined rapidly after the Chinese New Year, and some producers were operating at break-even by May 2026.
According to Mysteel, the weighted average full cost of ADC12 was RMB 22,959 per tonne in June 2026. Compared with Mysteel’s assessment of ADC12 spot average at RMB 23,459 per tonne, the per-tonne profit rose RMB 504 per tonne month-on-month, implying a theoretical industry margin of RMB 500 per tonne.
On the supply side, total installed capacity of cast aluminium alloy among 191 sampled producers reached 19.105 million tonnes per year by end-June, rising, 5 per cent Y-o-Y, based on Mysteel’s survey. After excluding 1.766 million tonnes of idled capacity, effective operating capacity was 15.606 million tonnes per year. The combined production in the first half totalled 3.24 million tonnes, down 8.91 per cent Y-o-Y, with Anhui recording the largest decline.