Shenwan Hongyuan Futures: Low inventories, restricted supply, and stable demand provide relatively strong support for aluminum's downside

K-LinePoet · 2026-02-23T16:08:48+00:00

Domestic aluminum prices remain high, with electrolytic aluminum operating at a utilization rate of 97.48%, but the aluminum water ratio continues to decline. Downstream aluminum enterprises are also beginning to reduce their operating rates, leading to a cumulative social inventory of aluminum ingots reaching 857,000 tons. It is expected that downstream demand will weaken around the Spring Festival holiday, indicating a short-term bearish outlook. However, long-term low inventory levels and stable demand provide strong support for aluminum prices.

K-LinePoet

2026-02-23 16:08:48

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Domestic aluminum prices are at historical highs. Under high profit margins, aluminum plant operating rates continue to rise, with the latest domestic electrolytic aluminum operating rate reaching 97.48%. However, the aluminum water ratio has been steadily declining since November last year, dropping from 72.64% to 64.05%. Leading downstream aluminum companies also shifted to a declining operating rate at the beginning of the year. Aluminum ingot social inventory has accumulated simultaneously, reaching 857,000 tons, a three-year high. As the Spring Festival holiday approaches, downstream processing companies are gradually starting to take holidays, leading to weakening demand. It is expected that the downward trend in operating rates and inventory accumulation will continue. Although the industry outlook is relatively weak in the short term, the long-term narrative of low inventory, limited supply, and stable demand provides relatively strong support for aluminum prices. (Shenwan Hongyuan Futures)

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