China’s aluminum smelters are nearing capacity limits as producers maximize output to capitalize on strong margins and a global supply shortage linked to the Iran war. Output hit a record 129,000 tons last month, while Citigroup Inc. said aluminum has its most bullish setup in 50 years. However, weak domestic demand and rising inventories are raising overproduction concerns. Stocks have more than doubled this year to 1.37 million tons, a six-year high. China’s annual 45 million-ton capacity cap,

China’s aluminum smelters are nearing capacity limits as producers maximize output to capitalize on strong margins and a global supply shortage linked to the Iran war. Output hit a record 129,000 tons last month, while Citigroup Inc. said aluminum has its most bullish setup in 50 years. However, weak domestic demand and rising inventories are raising overproduction concerns. Stocks have more than doubled this year to 1.37 million tons, a six-year high. China’s annual 45 million-ton capacity cap, introduced in 2017 to curb oversupply and emissions, is also being tested, with smelters using upgrades to run about 3% above nameplate capacity.