Aluminium End-Use Tracker: China end-use demand remains weak despite tentative signs of macro stabilisation

Research evidence excerpt

Aluminium End-Use Tracker: China end-use demand remains weak despite tentative signs of macro stabilisation

China end-use demand headwinds persist amid tentative macro stabilisation

■China's economy continues to exhibit a K-shaped recovery. Domestic demand remains weak, with fixed asset investment and

consumption losing momentum, while exports and new-economy sectors continue to support industrial production. More recently,

June PMI data point to early signs of stabilisation, suggesting 2Q’26 may mark a cyclical trough.

■Citi economists continue to expect fiscal deployment to accelerate in 2H’26. Combined fiscal expenditure through budgetary and

government fund channels has contracted for three consecutive months, implying significant scope for an improvement in fiscal

impulse even without additional policy measures.

■Our China Aluminium End-use Tracker (CAET) continues to point to a weak domestic demand backdrop in May, reflecting ongoing

weakness across property-related and broader cyclical sectors. While cyclical demand remains subdued, decarbonisation-related

growth has also slowed as EV and solar momentum moderates from elevated levels.

■However, actual aluminium demand is not as weak as our implied CAET would suggest. Strong exports of semis, fabricated products

and aluminium-intensive manufactured goods continue to support aluminium demand through China's broader manufacturing supply

chain, partially offsetting weak domestic end-use demand.

■Recent aluminium price weakness has accelerated inventory drawdowns. Primary aluminium inventories have de-stocked more rapidly

in recent weeks, while billet inventories have fallen below historical seasonal levels, suggesting downstream fabrication activity remains

firmer than domestic demand indicators alone imply.