Shanghai aluminum futures inched up ¥65 to ¥24,445/mt on June 22, a 0.27% gain that was the smallest among the six base metals on the SHFE. The muted move reflects the weight of record Chinese production — national output hit an annualized 37.2 million tons in May, with Yunnan province smelters operating at near 100% capacity after two years of hydropower-related curtailments.
Yunnan's smelters added roughly 1.2 million tons of annual capacity that had been idled during the 2023–2025 drought cycle. With reservoir levels now above the five-year seasonal average, those smelters are running flat out. The result is a well-supplied Chinese market — SHFE aluminum stocks sit at approximately 285,000 tons, 40% above the same period in 2025.
The SHFE-LME aluminum spread is essentially neutral at current levels, offering no significant arbitrage incentive in either direction. Chinese exports of semis (extrusions, sheet, foil) remain elevated at 5.2 million tons annualized, but the export market is increasingly contested by India, which has ramped aluminum semis production by 18% year-on-year. The global aluminum market is long on metal and short on places with attractive delivered premiums.
Chinese aluminum is plentiful and cheap at the LME level, but the delivered premium is where you win or lose. Asian buyers sourcing from Chinese smelters should push for formula-based premiums rather than fixed — with record production and neutral arb, premiums have room to compress. For buyers outside Asia, the glut of Chinese semis exports means extrusions and sheet are a buyer's market. If you have flexibility on origin, ask your supplier to quote ex-China versus ex-India or ex-Middle East — the spread may be $150–200/mt in your favor.