Global aluminum price rally could draw record exports from China

The rally in the global aluminum market could spur record exports of the metal from China, where elevated prices are capping consumption.

Aluminum on the London Metal Exchange is trading at its steepest premium to Shanghai futures since March 2022, after the war in the Middle East choked supplies from a key producing region and created a deficit on the international market.

Chinese exports rose 15% in April to 598,000 tons, the highest since November 2024. They could climb further to a record of more than 680,000 tons in the coming months, said Zhu Liangmin, an analyst with researcher Beijing Aladdiny Zhongying Business Consulting Co.

Aluminum rods for power grids — exempted from a recent tightening in China’s export rebates — and alloys used in wheels, are seeing particular demand, he said.

Although prices in China have been dragged higher by the LME’s surge, as the largest producer it’s largely immune from the shortage, particularly given a slowing economy and tepid domestic demand.

Many fabricators in the production hub of Henan province are running at full capacity to meet brimming orders for products such as ultra-thin battery foil, according to a local media report. It cited an executive at Henan Mingtai Aluminum Industrial Co., who reported a jump in overseas sales in the second quarter.

LME prices have hit four-year highs in recent days, but one complicating factor is that some of those gains have been driven by fears that Chinese supply could tighten if smelters are forced to cut output to meet the government’s energy use and emissions targets.

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