Aluminum production surge and market competition under trade barriers

Raw material supply: bauxite exports surged 39%, and China's dependence exceeded 70%

As the "source of fresh water" for the aluminum industry, the supply pattern of bauxite directly affects the cost of downstream processed products such as pipes, plates, coils, and bars. In the first quarter of 2025, Guinea, the world's largest bauxite exporter, saw its exports surge 39% year-on-year to US$1.87 billion, of which 85% went to China, the world's largest aluminum consumer market.

Data show that China's bauxite consumption in 2024 will reach 320 million tons, of which only 90 million tons will be domestically produced, and its import dependence will be as high as 70%. Guinea, Australia, and Indonesia are the main suppliers, accounting for 58%, 22%, and 15% of China's imports, respectively. It is worth noting that China's domestic bauxite is mainly low-grade diaspore, with an average aluminum-silicon ratio (A/S) of only 5-6, which is lower than the global average (7-8), which has led to domestic alumina plants having to rely on imported high-grade ores to maintain production.

The transmission effect of bauxite price fluctuations on the industrial chain is significant: a $10 increase in the price of bauxite per ton will directly push up the cost of alumina by about 120 yuan/ton (calculated at an exchange rate of 7), which will in turn increase the cost of electrolytic aluminum by 230 yuan/ton, equivalent to 6%-8% of the production cost of processed products such as pipes and plates. In May 2025, the landed price of 60% grade bauxite in Guinea has reached US$68/ton, up 12% from the beginning of the year, a record high in 18 months.


2. Output of primary aluminum and processed products: China contributes 62% of the global increase, and the European processing end is in contraction

In May 2025, global primary aluminum production reached 6.245 million tons, a year-on-year increase of 1.5%, a five-month peak. Among them, China's production was 3.74 million tons, a year-on-year surge of 5%, contributing 62% of the global increase. The release of production capacity in hydropower-rich areas such as Yunnan and Xinjiang has become a key driving force.

However, the downstream processing links are showing differentiation: the Lanjigarh refinery of the Vedanta Group in India produced 587,000 tons of alumina in the first quarter, a year-on-year increase of 9%, a record high, providing sufficient raw materials for its aluminum rod and aluminum plate production; while the European aluminum processing industry is in a downturn, with the comprehensive PMI falling to 40.1% in June, down 9.7 percentage points from May, and the order volume of aluminum tubes and aluminum coils decreased by 12% year-on-year. High energy costs and supply chain disruptions are the main reasons.

3. Trade barrier impact: EU carbon tariffs cause China's aluminum exports to fall by 30%, and the United States becomes the "takeover man" of European scrap

At the international trade level, policy barriers are reshaping the flow of aluminum. Since the full implementation of the EU Carbon Border Adjustment Mechanism (CBAM) in 2025, China's aluminum exports to the EU have fallen by 30% year-on-year, with aluminum tubes and aluminum plates being the most affected. According to current rules, China's thermal power aluminum products need to pay an additional 4%-8% carbon tariff to enter the EU. If indirect emissions are included in the future, the cost ratio will soar to 26%-51%.

At the same time, the adjustment of the US import tariff on aluminum has triggered changes in scrap trade: in the first quarter of 2025, Europe's exports of aluminum scrap to the United States surged 273% year-on-year to 143,000 tons. The low-cost recycling and processing capacity of the United States attracted European resources to flow in, but this also led to a shortage of raw materials for the production of aluminum coils and aluminum bars in Europe, and the operating rate of recycled aluminum enterprises dropped to 65%.

Conclusion

From bauxite to terminal processed products, the global aluminum industry chain is experiencing a complex cycle of "resource countries raising prices, production countries expanding capacity, and consumer countries competing". For sub-categories such as aluminum tubes, aluminum plates, aluminum coils, and aluminum bars, raw material cost fluctuations and trade policy changes will become the core variables of the market in the next six months. Enterprises need to find a balance between supply chain diversification and low-carbon transformation.