Aluminum prices rose by 6.3% in January
| Gamma-PGA (gamma polyglutamic acid) |
Aluminum prices remained strong in January and have recently experienced a slight decline. According to the Commodity Market Analysis System of Shengyi Society, as of January 19, 2026, the average price of aluminum ingots in the East China market was 23890 yuan/ton, an increase of 6.3% from the market average price of 22473.33 yuan/ton on January 1; Compared to the high point of the month (1.14), the market average price is 24673.33 yuan/ton, a decrease of 3.17%
In January 2026, aluminum prices continued the strong momentum of 2025, with a strong upward trend in early January, repeatedly reaching new highs. The core of this trend is due to three main factors: rigid supply constraints, structural growth in demand, and resonance between macro and financial factors, coupled with low inventory and rising costs, forming a pattern of “easy rise but difficult fall”. The specific reasons are as follows:
1. Rigid constraints on the supply side
The red line of 45 million tons of electrolytic aluminum production capacity in China continues to take effect, with limited new production capacity. The increase in aluminum water ratio further compresses the supply elasticity of aluminum ingots. According to data from the National Bureau of Statistics in 2025, the annual production of electrolytic aluminum reached 45.02 million tons, a year-on-year increase of 2.4%.
Intensifying overseas supply disruptions: Mozhar Aluminum (with an annual production capacity of 580000 tons) in South Africa will shut down in March due to power issues, Iceland Century Aluminum’s equipment has malfunctioned and reduced production, and global overseas production capacity may exceed 1 million tons. In 2026, the global supply growth rate will only be 1% -2%, and the supply-demand gap is expected to reach 290000 to 840000 tons.
Global aluminum inventory has dropped to a five-year low (LME inventory is about 800000 tons), weakening the buffering effect of inventory on prices and strengthening the expectation of “low inventory+tight supply”.
2. Structural growth on the demand side
The rigid demand for aluminum in emerging fields such as new energy vehicles, photovoltaics, energy storage, and computing infrastructure has surged, driving high-end aluminum consumption.
The beginning of the domestic “15th Five Year Plan” and the implementation of stable growth policies, coupled with the adjustment of the photovoltaic export tax rebate policy (cancelled from April 1st), have triggered a short-term increase in construction and a phased increase in demand.
The sharp rise in copper prices has led to an increase in the copper aluminum ratio, and the substitution effect of aluminum in some fields has become apparent, driving demand for replenishment
3. Macro and financial resonance
The market expects the Federal Reserve to continue its interest rate cut cycle in 2026, with loose liquidity driving up the attractiveness of colored assets and a weak US dollar reducing holding costs.
After copper prices led the way, funds flooded into the aluminum market seeking to make up for the increase, and futures holdings and trading volumes significantly increased, strengthening the upward momentum of prices.
Global geopolitical risks and fluctuations in energy costs have increased the risk premium of resource goods, coupled with positive domestic policy expectations, leading to a warmer market sentiment.
In summary, the current round of aluminum price increase is the result of the resonance of multiple factors including “supply rigidity+demand growth+macro easing+low inventory”. Short term prices may fluctuate due to the influence of financial sentiment and seasonal accumulation, but in the medium and long term, they are still supported by supply and demand fundamentals. Subsequent focus should be on: the extent of accumulated inventory before and after the Chinese New Year in China, the implementation of overseas production capacity shutdowns, the pace of interest rate cuts by the Federal Reserve and the trend of the US dollar, the sustainability of demand in the new energy sector, and the downstream acceptance and cost transmission capacity of high prices.
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