Ⅰ. Production end: The “expansion paradox” of alumina and electrolytic aluminum
1. Alumina: The Prisoner’s Dilemma of High Growth and High Inventory
According to data from the National Bureau of Statistics, China’s alumina production reached 7.475 million tons in March 2025 (+10.3% year-on-year), with a cumulative production of 22.596 million tons in the first quarter (+12.0% year-on-year). Despite the continuous expansion of production, the market has fallen into a vicious cycle of “increasing production without increasing income”
Oversupply intensifies: Domestic alumina social inventory has exceeded 3.958 million tons, coupled with pressure from the opening of the import window (Australian FOB price has fallen to $373/ton), and spot prices have fallen below the cash cost line in Shanxi region (3250 yuan/ton).
Cost pressures to reduce production: Alumina plants in Henan, Guizhou and other regions have started maintenance due to cash flow losses, resulting in a 2.85% month on month decrease in operating capacity to 88.6 million tons per year in March. However, the release of 1 million tons of new production capacity in Indonesia has exacerbated global overcapacity.
2. Electrolytic aluminum: the “tight balance” under the production capacity ceiling
The electrolytic aluminum production in March was 3.746 million tons (+4.4% year-on-year), and the cumulative production in the first quarter was 11.066 million tons (+3.2% year-on-year). Despite the resumption of production in the southwest region (with Yunnan Hongtai maintaining full production capacity of 1.5 million tons), supply elasticity is constrained by policies
Capacity replacement dominates: Sichuan, Guangxi and other regions resume production mainly through capacity replacement, while Baotou Aluminum’s old production capacity is withdrawn to offset the increase, resulting in limited net supply growth.
Inventory depletion accelerates: In early April, the social inventory of electrolytic aluminum decreased to 744000 tons (year-on-year -138000 tons), and LME inventory also fell back to 459000 tons, supporting the resilience of aluminum prices.
Ⅱ. On the demand side: the “structural tearing” between traditional and emerging tracks
1. Traditional field: Double kill of architecture and export
The real estate chain continues to shrink: from January to March, the sales area index of commercial housing was in a “cold” range, the construction profile construction rate was only 61%, and the growth rate of aluminum production (1.3%) was significantly lower than the growth rate of electrolytic aluminum supply.
Export faces tariff attack: US aluminum tariffs on China have risen from 104% to 145%, with aluminum exports in January and February down 4.5% year-on-year. Companies are turning to Southeast Asian transit trade as a safe haven.
2. New energy and high-end manufacturing: demand for new engines
Explosive growth of aluminum alloy: In March, the production of aluminum alloy reached 1.655 million tons (year-on-year+16.2%), driven by the lightweight of new energy vehicles (accelerated magnesium aluminum substitution) and the demand for photovoltaic frames (benefiting from the new domestic electricity price policy).
Breakthroughs in the localization of high-end aluminum materials: Dongqing Special Materials successfully trial produced high magnesium welding wire blanks, Longi Corporation’s aluminum alloy bracket orders increased by 35% year-on-year, and import substitution in high-end application fields accelerated.
Ⅲ.Cost and Price: Collapse of Alumina vs. Profit Expansion of Electrolytic Aluminum
1. Cost curve reconstruction
Aluminum oxide has fallen into a ‘death spiral’: domestic bauxite prices have loosened (down 5% month on month in the Jin Yu region), auxiliary material costs such as caustic soda and coal have decreased, and industry weighted costs have dropped to 3158 yuan/ton, but prices have fallen even faster (Shanxi spot prices have fallen below 3000 yuan/ton).
Expansion of profit margin for electrolytic aluminum: The cost proportion of alumina has decreased to 40% (55% in 2024), the weighted profit of the electrolytic aluminum industry has reached 3700 yuan/ton, and the gross profit margin of Yunnan hydropower advantage enterprises (such as Yunnan Aluminum Co., Ltd.) has exceeded 25%.
2. Increased price differentiation
Alumina oscillation bottoming out: The impact of overseas low-priced sources (Indonesia adds 6.5 million tons of production capacity to be invested) and the release of domestic new production capacity (Guangxi’s 2 million ton project reaches full production in April) have suppressed the rebound space, and the expected operating range for the second quarter is 2800-3200 yuan/ton.
High resilience of electrolytic aluminum: LME aluminum prices remain stable in the range of 2450-2550 US dollars/ton, and the main contract for Shanghai aluminum is supported by low inventory and policy expectations (domestic “equipment renewal” subsidies), with a short-term target of 20500 yuan/ton.
Ⅳ. International Trade and Policy: Tariff ‘Grey Rhino’ and Green Transformation
1. Impact chain of China US tariff game
Restructuring of the automotive industry chain: The United States has imposed a 25% tariff on imported cars, forcing Tesla’s Mexico factory to postpone production. The proportion of Chinese aluminum exports to the United States has dropped to 5% (companies such as Wan’an Technology are accelerating their shift to the European market).
Rusal Transfer Strategy: As the EU’s exemption period for Rusal is approaching, Rusal is accelerating its transfer to Asian warehouses (exporting 154000 tons of alumina to Russia in March), and LME inventory of Rusal has risen to 82%.
2. Carbon neutrality drives industrial upgrading
The pilot program for carbon footprint certification has been launched: Baise electrolytic aluminum carbon labeling certification has been implemented, and the target for recycled aluminum production capacity has been increased to 6 million tons per year (with Alcoa’s low-carbon aluminum premium reaching 15%).
Electricity cost game: European natural gas prices have rebounded to 35 euros/megawatt hour, and the resumption of production at Trimet Aluminum’s German factory has been delayed. The stability of domestic hydropower in Yunnan has become a supply risk point.
Ⅴ. Outlook for the future: The dual game of surplus and transformation
1. Alumina: Loss driven liquidation, focus on marginal production reduction
If the price continues to be below 3000 yuan/ton, the production reduction scale in the second quarter may reach 2 million tons/year, but Indonesia’s new production capacity may offset the supply contraction effect.
Strategy tip: Lock in long-term raw material costs at high prices and pay attention to China Aluminum Corporation (601600. SH), which has its own mines.
2. Electrolytic aluminum: structural opportunities under low inventory and policy dividends
The annual increase in demand for new energy (photovoltaic+new energy vehicles) is 800000 to 1 million tons, offsetting the decline in traditional fields. The aluminum price center is expected to maintain 19500 to 21500 yuan/ton.
Post time: Apr-22-2025