This move reflects the Chinese government’s broader strategy to guide its domestic aluminum industry toward high-quality development while enhancing its position in the global aluminum market. Despite the policy changes, the impact on the domestic and international aluminum markets is expected to be manageable, with adjustments likely to stabilize in the medium term.
Global Electrolytic Aluminium Market Continues to Show a Balanced Supply-Demand Outlook
The global electrolytic aluminum market has generally remained in a balanced supply-demand condition in recent years, with annual surpluses or deficits typically under 1 million tons. Production growth has kept pace with consumption in both domestic and international markets, preventing extreme supply shortages or oversupply pressures. While the cancellation of export tax rebates may introduce short-term challenges to export volumes, the overall supply-demand structure for global aluminum remains favorable. Consequently, domestic aluminum prices in Shanghai are expected to track global trends, particularly the London Metal Exchange (LME), and continue to operate at relatively high levels.
Persistent Shortfall in Domestic Electrolytic Aluminum Production
China's electrolytic aluminum market continues to experience a production shortfall, exacerbated by the rapid growth of the new energy sector and the rising demand for green and low-carbon metals. In recent years, China has maintained a net import pattern for electrolytic aluminum, with a projected 1.95 million tons of net imports in 2024—up 40% from the previous year. This gap between production and demand is expected to persist. By 2025, China’s electrolytic aluminum output may reach 44 million tons, yet due to the cancellation of export tax rebates, the growth of primary aluminum consumption is expected to slow, stabilizing around 45 million tons in 2024. To maintain balance in the domestic market, China is likely to continue importing around 1 million tons of primary aluminum in 2025. The structural shortfall in domestic electrolytic aluminum production is thus expected to remain unchanged.
Domestic Aluminium Processing Industry's Competitive Advantages
While the policy changes may temporarily affect China’s aluminum exports, the fundamental competitive advantages of the country’s aluminum processing industry are expected to remain intact. These include strengths in technology, equipment, business management, innovation, and product variety. Notably, Chinese aluminium products still have a significant cost advantage in global markets compared to similar offerings from other countries. As domestic and international price ratios adjust, and with the continued application of new technologies and equipment, the competitive edge of Chinese aluminium processing enterprises is likely to become more pronounced. This suggests that the high-level export performance of Chinese aluminium products will likely continue in the long term.
In conclusion, while the cancellation of export tax rebates on aluminium products will have some negative impact on the market, it is expected to be manageable within the broader context of China’s ongoing industrial and market development. The domestic upstream and downstream aluminum industries are likely to continue to operate at a high level of quality and sustainability, with no dramatic disruptions expected. Thus, while the policy changes warrant close attention, there is no need for an overly pessimistic outlook on the aluminium market.
