China's aluminum exports are expected to surge in the coming months, as buyers seek substitute supply to offset disruptions in the Persian Gulf region.
The conflict in Iran, now in its seventh week, is constraining supply from a region that accounts for about 9% of global production. China, as the world's largest producer, has emerged as the natural alternative.
Currently, the gap between international aluminum prices and the Chinese
market is at its widest since 2022. This creates a major opportunity for Chinese smelters as domestic aluminum inventories have just reached a six-year high.
Beijing Aladdiny Zhongying analyst Zhu Liangmin said that foreign orders for aluminum products used in automotive and packaging manufacturing are expected to rise significantly in April.
Beijing Aladdiny also forecasts that annual export volumes could match or surpass the 6.7 million tonnes record set in 2024 thanks to demand arising from the conflict.
Data show that China's aluminum exports in March reached 485,000 tonnes, up 13% from February. While this figure remains below the year-ago level, the month-on-month increase suggests the conflict may already be having tangible effects. For the first quarter, aluminum exports reached 1.46 million tonnes, up 6.5% from last year's pace.
Ms. Zhang Meng, CEO of Shandong Aize Information Consulting, said global buyers are increasing purchases of semi-finished products from China, which could lead to a surge in exports in May and June.
According to the consultancy, international traders are also looking for new ways to source metals from China, such as buying billet aluminum to remelt into versatile ingots. However, higher sea freight costs due to the war could constrain trade.
Against a backdrop of a slowing domestic economy in China, exports have become an important channel to absorb record-high production. Bloomberg Intelligence projects that profits from smelting activities will remain at record highs.
Nevertheless, the unit also notes that rising inventories could curb price gains in the domestic market. Another domestic headwind is that the automotive industry is gradually shifting to magnesium alloys – a lighter alternative to aluminum for manufacturing vehicle parts.
