In May, the monthly average price of aluminum on the Changjiang Nonferrous Metals Exchange closed at 24,300.56 yuan per ton, a significant drop of 358 yuan from April, marking a decisive break below the firm price plateau that had held for the past two months. The most structurally significant change in the market this month was not merely the price decline, but the collapse of the previous core logic of “cost support” and the rare divergence in the inventory structure between aluminum rods and aluminum ingots. This signals that the market’s driving logic is shifting from the “cost-push + resilient demand” dynamic of the first quarter to a rebalancing phase characterized by “weakening demand + materializing supply increases.” Unlike April’s tight supply-demand balance and spot premium, May saw a marginal easing of supply-demand conditions, with spot prices shifting to a discount. The continued accumulation of aluminum rod inventories against the market trend this month serves as a high-frequency early warning signal that warrants close monitoring next month and into the next quarter. Looking ahead to June, the core market tension will center on the mismatch between “increasing supply” and the “off-season for demand,” with the price center facing the risk of further downward pressure.
In May, the domestic aluminum market experienced a volatile downtrend, with all major indicators retreating across the board.
Regarding the price center, the monthly average spot price for aluminum ingots on the Changjiang Nonferrous Metals Exchange was 24,300.56 yuan/ton, down 358.01 yuan/ton month-on-month, representing a decline of approximately 1.45%. Prices opened high but closed low during the month, falling steadily from around 24,680 yuan/ton at the beginning of the month to the 23,950 yuan/ton level by month-end, a decline of approximately 700 yuan from the start of the month, representing a drop of nearly 3%. The monthly average spot price on the Nanhai Nonferrous Exchange was 24,455.56 yuan/ton, down 339.68 yuan/ton month-on-month, with a trend highly consistent with the Yangtze market, and the price differential between the north and south remained stable.
Futures markets weakened in tandem. The average price of the main Shanghai aluminum contract for the month was approximately 24,280 yuan per ton, with monthly highs and lows at 24,650 yuan per ton at the beginning of the month and 23,900 yuan per ton at the end, respectively. The monthly chart closed with a bearish candle, marking a decline of about 2.8%. Bullish sentiment in the market waned, with open interest at the end of the month decreasing by approximately 12,000 contracts compared to the beginning of the month, indicating that long positions were actively unwound. The spread structure underwent a key shift, with the spot price relative to the front-month contract shifting from a sustained premium in April to a discount for most of May. The monthly average was a discount of approximately 30 yuan/ton, with the range fluctuating between a premium of 20 yuan/ton and a discount of 80 yuan/ton, indicating that the tight spot market conditions have been substantially alleviated. In the international market, the average price of LME 3-month aluminum futures this month was approximately $2,470 per ton, down about 2.1% month-on-month. The monthly average SHFE/LME ratio edged down slightly from the previous month to around 8.1, with the import window remaining closed for most of the month.
Regarding the overall inventory picture, domestic social inventories of primary aluminum stood at 782,000 metric tons at the beginning of the month and fell to 735,000 metric tons by month-end, resulting in a net monthly drawdown of 47,000 metric tons. The pace of destocking was faster at the beginning of the month and slowed toward the end, with inventory peaking at the start of the month and bottoming out at the end. Meanwhile, aluminum billet inventories diverged significantly from those of primary aluminum, climbing from 128,000 metric tons at the beginning of the month to 146,000 metric tons by month-end—a cumulative increase of 18,000 metric tons. This represents the most alarming warning signal from the market this month.
Cost Support Logic Collapses, Rare Divergence in Inventory Structure
In May, the core logic driving market sentiment—cost support—showed clear signs of weakening.
On the supply side, domestic primary aluminum operating capacity expanded steadily this month. According to industry research data, operating capacity stood at approximately 42.85 million tons by month-end, an increase of about 150,000 tons from the end of April, with the capacity utilization rate continuing to rise slightly. The power supply situation in Yunnan remained generally stable; previously resumed production capacity has largely reached full output, and its marginal contribution is strengthening; in major production regions such as Inner Mongolia and Xinjiang, operating rates remained at high levels. The import window was closed for most of the month, resulting in a month-on-month decrease in imported aluminum ingot arrivals, which had a limited impact on the domestic spot market. When observing operational capacity within the context of the past six-month trend, the supply side has clearly transitioned from the slow recovery phase of the first quarter into a sustained, modest expansion phase characterized by a gradual upward trend. This implies that the supply-side logic supporting prices has shifted from “expectations of scarcity” to “realization of incremental supply,” making it highly likely that production will continue to increase month-over-month next month.
On the demand side, the structural divergence that the market fears most has emerged. In May, the average comprehensive operating rate of downstream aluminum processing enterprises was approximately 62.3%, a month-on-month decline of 1.5 percentage points, exceeding the seasonal decline typically seen during the same period in previous years. By sector, the decline in new orders for architectural profile manufacturers was particularly pronounced, consistent with the weakening of end-user data such as real estate completion area for the month, indicating that the characteristics of the traditional off-season are beginning to emerge. In contrast, the industrial profiles and aluminum sheet, strip, and foil sectors have maintained relatively stable operating rates, driven by demand from new energy vehicles and photovoltaic installations. However, this growth has not yet fully offset the decline in construction profiles. When comparing this month’s operating rates to the same period last year and adjusting for seasonal factors, the actual resilience of demand is weaker than in the first quarter. The strength in industrial profiles cannot mask the weakness in construction profiles, and the growth in new energy cannot compensate for the decline in real estate. This “decline” has temporarily dominated the market.