铝终端用途追踪中国终端需求依然疲弱尽管有初步改善迹象

Aluminium End-Use Tracker China end-use demand remains weak despite tentative signs of macro stabilisation Kenny Hu, CFAACCommodities Strategykenny.x.hu@citi.com+65 6657 3873 Viswanathrao KintaliACMetals Strategyviswanathrao.kintali@citi.com+91 22 4277 5092 Wenyu YaoACMetals Strategywenyu.yao@citi.com+44 20 7986 4551 Shreyas MadabushiACMetals Strategyshreyas.madabushi@citi.com+91 22 4277 5048 Tom MulqueenACMetals Strategytom.mulqueen@citi.com+44 20 7986 4559 Maximilian LaytonACGlobal Head | Commoditiesmax.layton@citi.com+44 20 7986 4556 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 andconsumption 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 andgovernment fund channels has contracted for three consecutive months, implying significant scope for an improvement in fiscalimpulse even without additional policy measures. ■Our China Aluminium End-use Tracker (CAET) continues to point to a weak domestic demand backdrop in May, reflecting ongoingweakness across property-related and broader cyclical sectors. While cyclical demand remains subdued, decarbonisation-relatedgrowth 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 productsand aluminium-intensive manufactured goods continue to support aluminium demand through China's broader manufacturing supplychain, partially offsetting weak domestic end-use demand. ■Recent aluminium price weakness has accelerated inventory drawdowns. Primary aluminium inventories have de-stocked more rapidlyin recent weeks, while billet inventories have fallen below historical seasonal levels, suggesting downstream fabrication activity remainsfirmer than domestic demand indicators alone imply. ■At the same time, China's aluminium system continues to operate near its effective capacity ceiling. While monthly production dataremain volatile, sustained growth in China's aluminium supply would require a meaningful break above the effective capacity cap-something that remains outside our base case. ■Metal Matters-An existential moment for the aluminium bull market China Macro-AI strength contrasts with weak old-economy investment ■China‘s May macro data showed further weakness in domestic activity.Total fixed asset investment (FAI) deteriorated, withmanufacturing investment growth turning negative (-0.4% ytd y/y) and infrastructure investment slowing to 0.6% ytd y/y. While AI-related sectors remain strong (telecom, IT services etc.), investment momentum across traditional industries continues to soften. ■Citi economists see growing evidence of a crowding-out effect between AI-related investment and old-economy sectors.At thesame time, exports remain resilient and increasingly supported by structural growth drivers including AI deployment and the globalenergy transition, providing an important offset to weak domestic demand. ■Looking ahead, fiscal deployment is expected to accelerate into 2H’26.After three consecutive months of contraction in combinedfiscal expenditure, even a partial reversal could lift fiscal impulse meaningfully and support infrastructure activity and broader domesticdemand. China Macro-2Q’26 likely marks a cyclical trough, but growth remains uneven ■June PMI data point to early signs of stabilisation in China's economy, with manufacturing PMI returning to expansion territory at50.3, above both market expectations and seasonal norms.Export orders continue to lead the recovery, while high-tech sectorsremain more resilient than traditional industries, highlighting the persistence ofChina's K-shaped economy. ■From a metals perspective, improving orders, output and raw material purchasing suggest industrial demand is beginning tostabilise following a weak 2Q.Rising production expectations indicate manufacturers are becoming more optimistic about activity incoming months, although the recovery remains uneven across sectors. ■However, continued weakness in output prices suggests pricing power and profitability remain under pressure, pointing to agradual rather than broad-based recovery.Meanwhile, non-manufacturing PMI remained in expansion at 50.2, supported by holiday-related services activity and tentative stabilisation in construction. ■Overall, Citi economists believe 2Q’26 is likely to mark a cyclical trough for China's economy.While domestic demand remainsuneven, improving activity indicators, resilient exports and expectations for stronger fiscal deployment in 2H’26 point to a more sta