In 2025, driven by macroeconomic factors and sector-wide momentum, aluminum prices initially experienced a period of range-bound trading with an upward bias. By the end of March, prices reached their previous range high before beginning to weaken. This coincided with the start of the "trade war" initiated by the Trump administration in the United States, characterized by continuously increasing tariffs, which plunged global markets into panic. During China's Qingming Festival holiday, the market saw a significant gap-down opening on the first trading day after the holiday. Subsequently, as macroeconomic sentiment eased, a gradual recovery process began, continuing until the end of September. Entering October, a rally began to form due to positive macroeconomic factors, a surge in copper prices, and a significant increase in the copper-aluminum ratio. By late October, capital began to flow from the copper market to the aluminum market in large quantities, and Shanghai aluminum prices entered an accelerated upward trend. At this point, the upward potential for Shanghai aluminum prices was fully unleashed.
After peaking in December 2014, alumina prices began a significant downward trend due to improved supply from mines, the release of new and reactivated production capacity, and a cooling of market sentiment. This downward trend continued until April. Subsequently, influenced by macroeconomic events and cost-side support, alumina prices entered a period of bottoming out and fluctuating. In May, however, due to a series of disruptions by the Guinean government regarding bauxite mining rights, the market became concerned about future bauxite supply, leading to a rebound in alumina prices. Currently, although several major mines remain shut down, market sentiment has subsided, and coupled with the continued increase in production capacity, alumina prices have returned to a weak trading state.
The cast aluminum alloy, newly launched in mid-2025, is currently tracking the overall trend of Shanghai aluminum futures and has not yet established its own independent market trend.
Global bauxite production is growing steadily
Since 2024, the global bauxite supply landscape has changed, with Guinea rising to become the world's largest bauxite producer. In addition, China's domestic bauxite production has also seen a slight increase. From the current global supply perspective, Guinea's bauxite supply continues to maintain rapid growth, and its high-grade ore, ease of extraction, and low production costs make its mineral resources highly sought after. Due to China's enormous demand and the near-depletion of domestic mines, Chinese companies have been actively investing in bauxite development in Guinea in recent years. However, Guinea's turbulent political situation and relatively underdeveloped infrastructure are hindering China's bauxite imports from the country. The local government's cancellation of several bauxite mining licenses, the prohibition of production and export from a major mine, and the impact of the rainy season on mining and transportation have all become significant factors limiting the long-term stability of Guinea's bauxite exports.
China's bauxite imports will continue to increase.
Since the beginning of this year, China's bauxite imports have continued to increase, with Guinea and Australia being the main sources of imports. The increase from Guinea has been particularly significant. In recent years, China's bauxite imports from Guinea have maintained a growth rate of approximately 20%, but this year, the import volume from Guinea has increased by nearly 40%. Currently, bauxite imports from Guinea account for about three-quarters of China's total bauxite imports. It is projected that by 2026, bauxite from Guinea will account for 75% to 80% of China's total bauxite imports.
Overall, due to the increasing depletion of domestic bauxite resources in China, more and more alumina plants are relying on imported ore. As Chinese companies increasingly engage in mining operations abroad, China's dependence on foreign bauxite resources will continue to grow. Therefore, in the long term, China's bauxite imports will maintain an upward trend, but it is also important to consider that short-term fluctuations may be caused by factors such as soaring shipping costs and geopolitical events. These unexpected situations often act as triggers that influence short-term market trends.
China's bauxite production continues to decline
Due to environmental concerns and the depletion of mineral resources, many bauxite mines in China have experienced shutdowns and production halts in recent years, leading to a decline in output. While short-term disruptions have decreased in the second half of this year, the long-term trend remains unchanged. It is projected that bauxite production will continue to decline slightly in 2026, with the annual output expected to be around 50 million tons.
In the long term, China's policies regarding bauxite mining are becoming stricter year by year, primarily due to regulations concerning ecological protection and production safety. Furthermore, China's mineral reserves are decreasing at a rate of approximately 3% annually. With the increasing demand for alumina downstream, China's dependence on foreign sources for bauxite is continuously rising, and it is projected that China's bauxite import dependency may exceed 75% by 2026.
The trade surplus in alumina continues to grow
In 2025, with the decline in alumina prices, alumina exports grew rapidly. This was primarily due to changes brought about by geopolitical issues; since the Russia-Ukraine conflict, Russian buyers have been continuously seeking alumina supplies from China. Based on current developments and the ongoing sanctions, China's alumina exports are expected to continue to increase in the future.
Alumina production increased significantly
Based on data from the past two years, China's alumina production increased by 3.6% year-on-year in 2024, a significant improvement compared to the 1.4% increase in 2023. In 2025, with the increase in alumina production resumption and the commissioning of new capacity, the growth rate of production further accelerated, with cumulative production in the first ten months of this year increasing by 8% year-on-year. Furthermore, 13.9 million tons of capacity are expected to come online in 2026. Assuming no other disruptive factors, and based on current ore supply levels, alumina production is projected to maintain a growth rate of around 5% in 2026.
Alumina inventories remain at high levels
Alumina inventories have been on a downward trend since 2020. After entering 2024, inventories recovered to some extent, but began to decline again in the second quarter, continuously reaching new lows. This was a major reason for the sustained strength in alumina prices in 2024. Entering 2025, alumina inventories showed a significant recovery starting from the end of January. According to BaiChuan data, as of November 21st, the total alumina market inventory was 194,000 tons, and the total factory inventory was 1,803,000 tons, totaling 1,997,000 tons, a 23.6% increase compared to the same period in 2024. Looking ahead to 2026, as demand gradually peaks and supply still has potential for further increases, alumina inventories are expected to remain at high levels.
Aluminum exports are likely to continue to decline
Since the beginning of 2024, China's imports of primary aluminum have shown significant year-on-year growth. This is due to two main factors: firstly, the Shanghai-London aluminum price ratio has remained at a high level; and secondly, geopolitical changes have led to a large influx of Russian aluminum ingots into the Chinese market. Looking ahead, with the continuous increase in trade between China and Russia, it is expected that primary aluminum imports will remain at a high level.
In 2023, with monetary policies tightening and economic recession in Europe and the United States, and weak end-user demand, China's aluminum exports showed a downward trend. After 2024, aluminum exports improved significantly. However, with the deepening of global trade barriers, many countries have launched anti-dumping and countervailing duty investigations against Chinese aluminum products. Entering 2025, the US government, after Trump took office, further imposed comprehensive tariffs on aluminum and aluminum products. Under the influence of multiple unfavorable factors, it is expected that China's aluminum exports will continue to be affected in 2026.
Primary aluminum production capacity remains at a high level
In 2025, China's electrolytic aluminum production growth rate is expected to slow down compared to 2024, and this slowdown is projected to continue into 2026 due to operating capacity gradually reaching its peak. Changes in electrolytic aluminum operating capacity were quite significant between 2020 and 2023, and total capacity also showed a gradual increase. In 2024-2025, due to the continuous rise in electrolytic aluminum smelting profits, operating capacity reached its peak in recent years.
According to statistics from BaiChuan Information, as of November 20th, China's theoretical installed capacity for electrolytic aluminum (calculated based on facilities with production capacity) was 47.769 million tons, with a theoretical operating capacity of 44.135 million tons, resulting in an operating rate of 92.39%. In 2026, it is expected that 1.78 million tons of electrolytic aluminum capacity nationwide will be subject to production cuts, while another 2.414 million tons of planned new capacity are yet to be released.
The operating level of social inventories of aluminum ingots continues to move downwards
Looking at the social inventory of aluminum ingots over the past five years, it can be observed that the inventory level has generally shown a trend of gradual decrease year by year, with the overall level declining annually. The inventory peak in 2024 is significantly lower than the peaks in 2021-2023, and this trend is expected to continue in 2025. The inventory peak after the Spring Festival is basically the lowest in recent years, and the period of high inventory is also relatively short. The main reason for the smaller fluctuations in inventory throughout the year is the increased proportion of molten aluminum and the decreased amount of cast ingots. Therefore, the sensitivity of prices to inventory has also significantly decreased, and low inventory levels will become the norm in the industry in the future. Looking ahead to 2026, it is expected that inventory will still experience two periods of accumulation during off-peak seasons, with the annual peak occurring after the Spring Festival.
The production of recycled aluminum alloys is increasing year by year
According to data from the Recycled Metals Branch of the China Nonferrous Metals Industry Association, in 2023, China's production capacity of recycled cast aluminum alloys reached 12.2 million tons, with an average annual compound growth rate of 6.35% since 2012; production reached 5.8 million tons, with an average annual compound growth rate of 5.12% since 2012; and approximately 4.35 million tons of ADC12 cast aluminum alloy ingots were produced, accounting for 75% of the total recycled cast aluminum alloy production.
Aluminum alloy finished product inventories remain at a high level
Since the beginning of 2024, aluminum alloy ingot inventories have experienced a shift from accumulation to depletion. In 2025, aluminum alloy ingot inventories, mirroring aluminum ingot inventories, began an accumulation cycle. However, after mid-May, due to the approaching off-season for downstream demand, inventories began to accumulate again. Overall, aluminum alloy inventories exhibit certain seasonal characteristics; during the middle of the year, due to the traditional off-season, inventories are often at their highest levels of the year. However, after the arrival of the off-season in 2025, the increase in inventories was particularly significant, reaching a new high in recent years. It is expected that this upward trend will continue into the early part of 2026.
The real estate industry continues to languish at the bottom
In 2025, China's real estate market will remain in a period of deep adjustment, characterized by "overall pressure and marginal changes." On the supply side, core indicators such as investment, new construction starts, construction in progress, and completed projects all show double-digit declines, indicating extremely low investment willingness among real estate developers and continued industry contraction. On the demand side, both the sales area and sales volume of commercial housing are declining, and market confidence needs to be restored. Overall, the market is still searching for a bottom, and a comprehensive recovery depends on improvements in the macroeconomic environment and more targeted policy support.
The growth of new energy vehicles may slow down
According to the latest production and sales data, in 2025, driven by favorable factors such as intensified and expanded trade-in policies and accelerated implementation of corporate innovation achievements, the passenger car market is expected to continue its strong performance. The main reasons for this growth are consumer stimulus policies such as car price reductions and tax exemptions. In addition, the rapid development of new energy vehicles has also boosted the growth of the entire automotive industry. From a long-term perspective, the rapid development phase of new energy vehicles will eventually end, and the growth rate of production and sales will slow down, but their contribution to marginal growth will still be the most important part of the downstream aluminum consumption sector. It is projected that the production and sales growth rate of new energy vehicles will be between 15% and 20% in 2026.
The home appliance industry is experiencing a slowdown in growth
In 2024, the performance of the three major home appliance sectors was relatively strong, and with the favorable "trade-in" policy, cumulative year-on-year growth remained at a high level. In 2025, although the favorable policies are still in effect, there are signs of a cyclical slowdown in the replacement cycle of durable consumer goods. Data shows a slowdown in the growth rate of the three major home appliance sectors, with significant differentiation across product categories. For example, washing machine and refrigerator production increased significantly in August, but air conditioners entered their off-season, with a month-on-month decline in production. Considering the situation in the first ten months of this year, overall growth has slowed. It is expected that in 2026, provided the favorable policies do not diminish, the home appliance industry will generally be able to maintain positive growth.
Investment in power grid construction is experiencing rapid growth
In 2025, State Grid's annual investment scale will exceed 650 billion yuan for the first time, focusing on ultra-high voltage and digital upgrades. The company plans to complete seven ultra-high voltage projects, including two AC and five DC lines. The ±800 kV DC lines such as Longdong-Shandong, Hami-Chongqing, Ningxia-Hunan, and Jinshang-Hubei, as well as the 1,000 kV AC lines such as Sichuan-Chongqing and Datong-Tianjin South, will be put into operation, adding approximately 56 million kilowatts of transmission capacity. Eight other projects, including three AC and five DC lines, will be simultaneously advanced, driving the localization rate of core equipment such as flexible DC transmission and converter valves, and supporting the transmission needs of 150 GW from large-scale wind and solar power bases in western China.
The photovoltaic industry is transitioning from the period of rapid growth
According to the latest data, from January to October, the cumulative newly installed solar power capacity nationwide reached 252.87 GW, a year-on-year increase of 39.48%.
In recent years, the ultra-rapid development of photovoltaic (PV) installations has led to overcapacity in the industry. With the decline in PV module prices, companies' profitability per watt has decreased significantly. By 2026, the industry will face resource consolidation, and capacity growth will become more orderly. According to the European Photovoltaic Industry Association, global new PV installations will reach 665 GW in 2026. Wood Mackenzie predicts that, under the accelerated marketization of electricity trading in China, the growth rate of PV installations will slow down significantly between 2026 and 2034, with the average annual installation volume decreasing to 312 GW during this period. Assuming that 1 GW of PV installation consumes approximately 19,000 tons of aluminum, the estimated global demand for aluminum for new PV installations in 2026 will reach 12.635 million tons, with China accounting for approximately 5.928 million tons.
Overall, in 2025, the upstream segment of the aluminum industry chain saw some easing of supply constraints. Ore imports increased, and disruptions to domestic mining operations were relatively limited. Alumina producers maintained high operating rates, with several new and restarted production capacities coming online. However, with a significant drop in alumina spot prices and a substantial contraction in profits, even leading to losses, some high-cost production facilities have ceased operations for maintenance. In the future, the interplay between idled capacity and new/restarted capacity will be a key factor influencing alumina prices. In the electrolytic aluminum sector, lower costs and significantly improved profits led to increased operating rates, with production capacity operating at near full capacity. This trend is expected to continue into 2026. On the demand side, operating rates in downstream processing industries showed significant divergence: traditional sectors such as construction profiles, plates, and foils performed weakly, while sectors such as cables, alloys, and industrial profiles performed relatively well. In terms of end-use demand, new energy-related industries and power grid construction maintained strong growth. It is expected that the growth rate of new energy vehicle production and sales may slow down in 2026 due to the phasing out of subsidies, but power grid construction will maintain a high growth level during the new "15th Five-Year Plan" period. Regarding inventory, there are some concerns: persistently low ingot production has led to a continuous decline in inventory levels, and low inventory levels weaken the price buffer, which is evident from the activity of market funds as delivery dates approach.
Looking ahead to 2026, the complexity and severity of the global macroeconomic environment will continue to significantly impact the non-ferrous metals market. Furthermore, potential changes in Guinea's mining policies may continue to disrupt the market, bringing uncertainty to aluminum prices. The pattern of differentiated demand is expected to intensify, with growth in emerging industries potentially partially offsetting the decline in demand from traditional sectors. As the financial attributes of aluminum become increasingly prominent, and its correlation with other non-ferrous metals such as copper strengthens, Shanghai aluminum prices are expected to maintain a strong upward trend. The trends of other products in the industrial chain will diverge: driven by demand from new energy vehicles and other sectors, casting aluminum alloys are expected to strengthen in line with aluminum prices; however, due to supply-demand imbalances, the low-price trend of alumina is unlikely to reverse in the short term. In terms of price ranges, the main operating range for aluminum prices in 2026 is expected to be 20,000-25,000 RMB/ton, alumina 2,000-3,000 RMB/ton, and casting aluminum alloys 20,000-24,000 RMB/ton.
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