China’s aluminum exports to surge as Mideast disruptions persist

Chinese aluminum exports are expected to surge in coming months as buyers look for other sources of the metal to offset disruptions in the Persian Gulf.

The conflict in Iran, now in its seventh week, has choked supply from a region that accounts for about 9% of global output. China, the world’s biggest producer, is an obvious alternative. International prices are showing their biggest premium to the Chinese market since 2022, creating an opportunity for smelters at a time when local inventories of the metal have climbed to a six-year high.

Overseas orders for aluminum products used in cars and packaging should see a noticeable increase in April, said Zhu Liangmin, an analyst with Beijing Aladdiny Zhongying Business Consulting Co. Annual sales could match or exceed the record 6.7 million tons exported in 2024 due to the extra demand arising from the war, Aladdiny predicts.

March exports of 485,000 tons were 13% higher than February — suggesting the war may already be having an impact — although they were lower than the year before. Over the first quarter, exports hit 1.46 million tons, which is 6.5% ahead of last year’s pace.

Exports are an important channel for soaking up record levels of output at a time when the domestic economy is slowing. Chinese firms have shown their readiness to step in with alternative supplies for overseas customers. The trading unit of Aluminum Corp. of China Ltd. issued a release on May 31 touting a sale to meet the “urgent procurement needs of a key customer in Thailand” for 510 tons of alloy, including a rare shipment of 10 tons by plane.

Global clients are buying more semi-finished products from China, which could lead to a spike in exports in May and June, said Zhang Meng, general manager at Shandong Aize Business Information Consulting Co.

International traders are also exploring new ways of securing Chinese metal, potentially buying aluminum rod for remelting into general purpose ingots, the consultancy said in a note, although rising shipping costs because of the war could limit the trade.

Chinese producers, meanwhile, are well positioned. Bloomberg Intelligence expects smelting profits to stay near all-time highs, although it said the increase in stockpiles is likely to cap local price increases. Another potential headwind domestically is the auto industry’s adoption of magnesium alloys, an even lighter alternative to aluminum for car parts.

Read More: Aluminum price jumps to four-year high on Trump’s blockade of Hormuz