Core Viewpoint - The report from Caixin Securities indicates that the electrolytic aluminum market is expected to maintain a tight balance from 2025 to 2026, supporting an upward shift in aluminum prices, with low industry chain costs likely driving profit expansion [1] Supply and Demand Analysis - The supply of electrolytic aluminum is limited, with a production capacity ceiling of 45 million tons established in China, and as of June 2025, the operating capacity is 43.829 million tons with a utilization rate of 96%. SMM forecasts a net increase of only 300,000 tons in supply by 2025 [1] - On the demand side, traditional aluminum demand in construction has declined, but the impact is expected to be limited due to a low base. Emerging sectors such as new energy vehicles, photovoltaics, and ultra-high voltage are anticipated to offset the decline in traditional demand, indicating resilience in electrolytic aluminum consumption [1] Price and Inventory Trends - Global inventories are projected to decrease, supporting a fluctuating upward trend in aluminum prices. As of July 25, 2025, combined LME, COMEX, and SHFE inventories fell from 864,000 tons at the end of 2024 to 579,000 tons, with social circulating inventory at 512,000 tons, down from 788,000 tons year-on-year [2] - The A00 aluminum price fluctuated between 19,500 and 21,000 yuan per ton in the first half of 2025, with a tight balance in the market allowing for price recovery despite global trade policy uncertainties [2] Cost and Profitability Insights - The cost structure in the aluminum industry is shifting downward, with significant reliance on overseas bauxite. SMM predicts an increase of 13.4 million tons in domestic alumina capacity by 2025, while the supply of alumina remains relatively loose, exerting downward pressure on prices [3] - The profitability of the electrolytic aluminum segment is expected to improve, with estimated profits per ton of electrolytic aluminum reaching 2,376.3 yuan in Q1 and 3,378.6 yuan in Q2 of 2025, reflecting a 42.2% increase from Q1 to Q2 [3]