According to China Energy Net, as the impact of geopolitical conflicts in the Middle East continues to spread, risks are rapidly escalating across the aluminum supply chain. Recently, aluminum prices have continued to rise due to shipping disruptions in the Strait of Hormuz and production halts at multiple aluminum facilities across the Middle East. The industry estimates that the global aluminum market will face a supply shortfall of approximately 900,000 metric tons in the second quarter of this year, with global aluminum inventory days of supply dropping to just 45 days.
China is a major global aluminum producer, and rising aluminum prices have prompted companies to operate at full capacity, leading to sustained improvements in performance. In recent years, many aluminum companies have proactively relocated production capacity to regions rich in hydropower and actively developed clean energy sources such as wind and solar power, integrating green electricity into aluminum production. Additionally, several aluminum production bases have established deep integration with new energy manufacturing, continuously increasing the value-added of aluminum products. However, industry insiders also caution that China remains relatively dependent on imported bauxite, and future instability in international supply could still impact the country. Continuously advancing recycling systems for automobiles, batteries, and photovoltaics to promote the circular use of aluminum resources will not only mitigate the impact of external supply risks but also further reduce energy consumption and emissions in aluminum production.
Supply Instability Drives Up Aluminum Prices
Aluminum is malleable, corrosion-resistant, and has excellent heat dissipation properties, making it a key material for photovoltaic mounting brackets, frames, and heat sinks. By 2040, aluminum demand in the photovoltaic industry is projected to reach nearly 4.6 million metric tons. Thanks to its lightweight properties, aluminum alloys have also become a vital material for automotive bodies and are used in battery packs and thermal management systems to reduce component weight and enhance heat dissipation. The industry estimates that by 2030, the amount of aluminum used per new energy vehicle will exceed 350 kilograms. Additionally, aluminum’s excellent electrical conductivity makes it an indispensable material for power grid construction.
The ongoing conflict in the Middle East has severed key supply routes for aluminum resources used in the new energy sector. According to J.P. Morgan, the Middle East is projected to achieve a net export surplus of 5 million metric tons of primary aluminum by 2025, accounting for nearly 7% of global production. Currently, due to the closure of the Strait of Hormuz, Bahrain Aluminum Company has suspended shipments, and Qatar Aluminum has halted production.
As the recent conflict escalated, two major aluminum plants in the Middle East were attacked. Among them, the Al-Tawila plant may require 12 months to fully resume primary aluminum production. In 2025, this plant is projected to produce 1.6 million metric tons of aluminum ingots, while its alumina plant is expected to produce 2.4 million metric tons of alumina, meeting 46% of the total alumina demand for Emirates Global Aluminium (EGA). EGA is one of the largest aluminum producers in the Middle East and a key supplier to the global market.
The instability in aluminum supply extends not only to the Middle East but also to bauxite-exporting countries further upstream. Since the beginning of this year, bauxite prices in Guinea—the world’s largest bauxite producer—have been falling. In March, the country announced plans to restrict bauxite exports to boost mineral prices. Following reports that Guinea might limit bauxite exports, aluminum oxide futures prices surged sharply. Combined with the impact of the Middle East conflict, aluminum prices have continued to rise. The three-month aluminum price on the London Metal Exchange (LME) reached $3,531.50 per ton at one point, hitting a four-year high.
Capacity Expansion Boosts Aluminum Companies’ Performance
In terms of bauxite reserves, Guinea, Australia, and Vietnam account for the largest shares of the world’s total reserves, at 25.52%, 12.07%, and 10.69%, respectively. Although China’s bauxite reserves are relatively low, accounting for only 2.34% of the global total, it is one of the world’s largest producers and consumers of aluminum products. In 2024, China accounted for 59% of global primary aluminum production and 55% of global consumption.
In recent years, China has pioneered various alumina production technologies and constructed the world’s largest single-line alumina production facility, leading the way in the comprehensive utilization of associated resources. Alumina is processed into primary aluminum, which is then cast into aluminum ingots or directly processed into wire rods and profiles for industrial use. China’s primary aluminum output is projected to reach approximately 44 million metric tons in 2025; although production is constrained by capacity limits, the country will maintain its leading global position.
With rising aluminum prices this year, domestic aluminum companies have ramped up production to full capacity, driving sustained earnings growth. Mingtai Aluminum announced that it expects first-quarter net profit attributable to shareholders to reach 650 million to RMB700 million, a year-on-year increase of 48% to 59%; Shenhuo Co., Ltd. expects first-quarter net profit attributable to shareholders of RMB2.25 billion, a year-on-year increase of 217.68%; and Tianshan Aluminum expects first-quarter net profit attributable to shareholders of RMB2.2 billion, a year-on-year increase of 107.92%.
In terms of demand, a report by JPMorgan notes that while demand for metals such as copper and aluminum was historically driven primarily by real estate cycles, the demand for industrial metals has become increasingly diversified in recent years due to the accelerated construction of global data centers, upgrades to power infrastructure, and the expansion of the new energy sector.
Driven by demand from emerging industries, China’s aluminum industry chain continues to expand, with primary aluminum materials being transformed into lightweight materials, alloy products, and even new composite materials. In Shangrao, Jiangxi, traditional aluminum processing has been upgraded to support the photovoltaic industry, with highly automated production of photovoltaic aluminum profiles and aluminum frames, revolutionizing the traditional aluminum processing model. Meanwhile, in Baise, Guangxi, the battery industry—comprising battery aluminum casings, battery foil, and cathode materials—has continuously increased the value-added potential of this major aluminum hub’s resources.
Domestic Aluminum Enterprises Seek to Transform Their Production Landscape
Changes in the global aluminum market present both opportunities and challenges for China.
Xu Wenbin, an associate professor at the School of Energy and Mining at China University of Mining and Technology (Beijing), noted that major producing countries such as Guinea and Australia generally have a higher aluminum-to-silicon ratio in their bauxite, which is advantageous for subsequent processing. “In contrast, China’s bauxite contains higher levels of impurities such as iron and titanium.”
Public data indicates that China’s bauxite imports are projected to reach 220 million tons in 2025, a year-on-year increase of 28%. Among these, Guinea is the largest source country, accounting for 77.2% of annual imports—a 41.3% year-on-year increase.
In recent years, a number of Chinese aluminum companies have steadily advanced their mining projects in Guinea to secure domestic aluminum resource supplies. Among them, Chinalco’s Bofa Mine in Guinea had proven reserves of 1.758 billion tons in 2023, with a remaining mine life of over 60 years. The bauxite produced there primarily supplies Chinalco’s alumina plants in Guangxi and Shandong. While bolstering overseas “reserve bases,” a domestic aluminum resource circulation system is gradually taking shape. Social recycling channels for old home appliances and automotive aluminum materials are gradually improving. In the future, the scrapping and replacement of new energy vehicles and photovoltaic equipment are expected to drive up aluminum demand while continuously replenishing the “urban mines” of recycled resources.
According to statistics from the International Energy Agency, the production of one ton of primary aluminum can result in emissions of up to 16 tons of carbon dioxide equivalent, whereas the production of one ton of recycled aluminum emits only about 0.5 tons of carbon dioxide equivalent. Increasing the use of recycled aluminum is a clear path to reducing carbon emissions in the aluminum industry.
Emissions from aluminum production stem from high electricity consumption. China has proactively established a “cap” of 45 million tons for annual primary aluminum production capacity to prevent disorderly expansion of capacity. In recent years, green electricity has gradually been integrated into China’s primary aluminum production, with approximately 13 million metric tons of primary aluminum capacity relocated from northern coal-producing regions to hydropower-rich areas such as Yunnan and Sichuan.
In recent years, a number of domestic enterprises have actively implemented measures to support the aluminum industry’s carbon peak. Among them, State Power Investment Corporation (SPIC)—the world’s third-largest aluminum producer—has achieved a 46% share of renewable energy consumption in its 4.65 million metric tons of primary aluminum capacity. In addition, Weiqiao Pioneering Group has transferred 2.18 million tons of primary aluminum capacity to Yunnan, where it is developing and utilizing clean energy projects such as wind and solar power. Yunnan Aluminum Co., Ltd. (Yun Aluminum) uses green electricity for more than 85% of its operations and has become a pioneer in the aluminum industry in implementing “on-site distributed photovoltaic” systems.
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