Domestic: 45 million tons of red line has reached its limit

There is no room for easy expansion of production.

As of March 2026, the domestic electrolytic aluminum production capacity is about 45.18 million tons, with an operating capacity of 44.6 million tons and a capacity utilization rate of 98.7%, almost touching the 45 million ton red line clearly defined by the Ministry of Industry and Information Technology. The only compliant path for adding new production capacity – equivalent or reduced replacement of outdated capacity – determines that the annual output growth rate can only be maintained at 0.8% to 1%, and the supply elasticity is extremely limited.

At the regional level, Southwest hydropower aluminum bases in Yunnan and other regions will experience a period of dry season electricity after entering the first quarter of 2026, resulting in a phased reduction of production by 500000 to 800000 tons. As the summer electricity peak approaches, the risk of power rationing may resurface, putting downward pressure on local production.

Overseas: 2 million tons of permanent shrinkage

Compared to domestic supply, the contraction of overseas supply is more sustainable.

As of March 2026, the operating capacity of overseas electrolytic aluminum is about 29.38 million tons, but the cumulative production reduction scale has reached 1.804 million tons, and the production reduction scale in March alone reached 2.66 million tons. The core area of production reduction is concentrated in the Middle East, accounting for about 80% of the total overseas production reduction scale. In addition, due to the rupture of the power contract, Mozambique’s Mozhar aluminum plant has been indefinitely shut down (580000 tons), Iceland’s 210000 ton production capacity has been permanently shut down, and European and American aluminum plants have continued to reduce production due to the competition for electricity in the AI industry – a combination of multiple factors, and overseas supply has entered an irreversible contraction cycle.

Indonesia, which was once highly anticipated by the market, is expected to increase its production capacity by only about 900000 tons in 2026, which is far from enough to fill the aforementioned gap.

[Requirement: Turn off the old engine and start the new engine]

The proportion of traditional construction aluminum has decreased from 35% in 2020 to 22%, and real estate aluminum is no longer the pillar of demand growth.

The successor is new energy. The air conditioning industry continues to promote the use of aluminum instead of copper, which can reduce weight by more than 30% and cost by 20% for each air conditioner. It is expected that aluminum instead of copper will contribute about 160000 tons of incremental production in the air conditioning field by 2026. The demand for new energy vehicle battery aluminum foil, photovoltaic aluminum frame, energy storage equipment and other fields is showing exponential growth.

The logic of rigid supply cap and upgrading demand structure – the upward shift of aluminum price center does not rely on short-term event catalysis, but on a systematic reassessment of industry fundamentals.