Chain Reactions Under High Volatility: How Sharp Fluctuations in Aluminum Prices Reshape the Entire Industrial Chain Pattern

Chain Reactions Under High Volatility: How Sharp Fluctuations in Aluminum Prices Reshape the Entire Industrial Chain Pattern

Chain Reactions Under High Volatility: How Sharp Fluctuations in Aluminum Prices Reshape the Entire Industrial Chain Pattern

Since early 2026, global aluminum prices have fluctuated sharply, with LME three-month aluminum peaking at 3295.5 US dollars/ton on January 28 and domestic prices plunging 970 yuan/ton on February 2. As a key industrial material, aluminum price fluctuations spread along the industrial chain, reshaping the profit patterns of various industries.

Part 1: Core Impacts on the Upper, Middle and Lower Reaches of the Aluminum Industrial Chain

Upper, Middle and Lower Reaches of the Industrial Chain: Unequal Gains and Losses

Aluminum price fluctuations first affect its industrial chain, showing “differentiated benefits in the upper reaches, pressure in the middle reaches, and differentiation in the lower reaches”, widening the gap between leading and small-medium enterprises (SMEs).

Upper Reaches: Differentiated Price Dividends

  1. Leading enterprises gain substantial profits with cost advantages (e.g., hydropower or integrated industrial chain), with aluminum profit per ton reaching 8158 yuan on January 12, 2026.
  2. SMEs face pressure due to rigid production capacity ceiling, rising electricity and bauxite costs, falling into the dilemma of “rising prices but not increasing profits”.
  3. Bauxite and alumina enterprises have sluggish profits, with weak correlation with aluminum prices, as overseas production resumption offsets supply gaps.
Inspect the aluminum foil machine
Inspect the aluminum foil machine

Middle Reaches: Blocked Cost Pass-Through

  1. The industry’s comprehensive operating rate dropped to 59.4% in late January, affected by seasonal factors and price fluctuations.
  2. Aluminum profiles are the most affected (operating rate 44.3%), while sheet/strip/foil sectors also face squeezed profits despite partial seasonal demand.
  3. Enterprises take risk-aversion measures: small-batch stocking, suspending long-term low-price orders, and reducing production capacity.

Part 2: Specific Impacts on Various Application Industries

Different industries are affected differently due to varying aluminum usage, cost ratio and bargaining power, as summarized in the table below.
Application Industry
Proportion of Aluminum Cost
Core Impacts
Main Response Measures
Real Estate Industry
8%-12%
Suppliers’ profits compressed; SMEs face high pressure.
Price locking, small-batch stocking.
New Energy Industry
10%-60%
SMEs under cost pressure; “aluminum replacing copper” accelerates.
Price locking, technology-driven cost reduction.
Home Appliance Industry
5%-25%
Air conditioners affected most; SMEs’ profits squeezed.
Appropriate price adjustment, cost optimization.
Infrastructure Industry
3%-10%
Large projects unaffected; SMEs’ projects suspended.
Long-term price locking, project adjustment.
Packaging Industry
60%-80%
SMEs lose money; high-end sector stable.
Price adjustment, production reduction, innovation.

Real Estate Industry

SMEs’ suppliers have a gross profit margin below 5%. SMEs suspend construction or replace materials to control costs due to inability to lock prices.

New Energy Industry

Rigid demand offsets partial fluctuations. Leading enterprises reduce costs via price locking; “aluminum replacing copper” accelerates in charging stations.

Home Appliance Industry

Air conditioners are most affected. Leading enterprises adjust prices moderately; SMEs cut prices or configurations to survive.

Infrastructure Industry

Large projects are unaffected by long-term price-locking agreements; SMEs’ projects are suspended due to over-budget.

Packaging Industry

Aluminum foil cost is high. SMEs reduce production; high-end enterprises transfer costs via price adjustment.

Part 3: QA (Frequently Asked Questions)

Common Questions

  1. Q: What drives 2026 aluminum price fluctuations? A: Core factors: Indonesia’s bauxite ban, domestic production capacity ceiling, Yunnan’s hydropower shortage, overseas production suspension, low inventory, and US dollar/macro impacts.
  2. Q: Why different chain links react differently? A: Differences in cost control and bargaining power: upper reaches benefit, middle reaches bear pressure, lower reaches differentiate.
  3. Q: Which industry is most affected? A: Packaging (aluminum foil: 60%-80% cost ratio, thin profits). Real estate aluminum profiles are also severely affected.
  4. Q: Key factors for future prices? A: Yunnan hydropower, Indonesia’s ban, inventory accumulation, US dollar trend, and cost (alumina/electricity/carbon).
  5. Q: Enterprise risk-aversion measures? A: Long-term price locking, futures hedging, technology optimization, small-batch stocking, and “aluminum replacing copper”.

Henan Huawei Aluminum Co., Ltd

+86-19924932491

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No.52, Dongming Road, Zhengzhou, Henan, China

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