China seeks to maintain dominance in the aluminum market

As analysts expect global demand for aluminum to rise, a new development in China could significantly impact aluminum market demand and domestic consumption in the country. That said, market observers know that any announcement about metals coming from Beijing these days must be viewed through the lens of the ongoing tariff war with the United States.

China is the largest producer and one of the largest consumers of aluminum, producing around 43 million tons of aluminum annually and aims to remain the leader in the global aluminum market.

While it may be too early to accurately predict the final outcome of this new plan, initial reactions from a number of analysts have suggested that this could be a dual effort from China. They argue that the plan not only expands the industry but also allows the country to push for a "comprehensive" greener production method, thus helping it maintain its leadership position in the aluminum market.

Only time will tell how this trend will unfold, but the anticipated decline in China’s aluminum production, well before the release of this report, had already put the industry at risk. This year, China’s aluminum production is likely to grow by barely 2%. Some experts predict that next year’s figures could be even worse, especially after the United States recently announced the imposition of a 25% tariff on aluminum and steel imports from other countries, including China.

China’s new roadmap emphasizes better and more environmentally friendly aluminum output, as well as improving the flexibility and security of the aluminum supply chain. According to reports, this plan also sets goals over a two-year timeline to strengthen the raw material supply chain, use technology to innovate in production, and promote sustainable production.

Reports indicate that slower aluminum production, the removal of tax discounts on exports, and a range of other factors are likely to reduce China’s exports in the coming weeks. This, in turn, will have a negative impact on aluminum prices.

Under the new plan, China clearly intends to reduce its reliance on bauxite by strengthening recycling efforts, with the goal of increasing recycled aluminum production by 15 million tons. Much of this plan focuses on improving energy efficiency through investment in technology to reduce energy consumption and lower greenhouse gas emissions in the sector.