Today’s focus in the aluminum market: dual drivers of policies and trade frictions

The domestic policy ‘starting gun’ has been fired

On April 7, 2025, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly held a meeting to promote the high-quality development of the aluminum industry, clarifying the implementation of the “Three Year Action Plan for Green Transformation of the Aluminum Industry” from today. The policy core includes:

Strictly control the addition of electrolytic aluminum production capacity: in principle, thermal power aluminum projects will no longer be approved, and outdated production capacity of 3 million tons will be eliminated by 2027.

The “Doubling Plan for Recycled Aluminum” aims to achieve a production of over 13 million tons of recycled aluminum by 2025, with tax incentives tilted towards recycled aluminum enterprises.

Strengthening resource security: Launching pilot projects for the development of aluminum resources under coal in Henan and Shanxi provinces, promoting the self-sufficiency rate of domestic bauxite to 60%.

Affected by this, the A-share aluminum sector showed significant differentiation today, with green transformation concept stocks such as China Aluminum Industry (601600. SH) and Nanshan Aluminum Industry (600219. SH) rising more than 3% against the trend, while the stock prices of small and medium-sized aluminum enterprises that rely on thermal power were under pressure.

Countdown to US China tariffs’ boots landing ‘

The Office of the United States Trade Representative (USTR) reiterated today that the “equivalent tariffs” on Chinese industrial products will officially take effect on April 10th. Although aluminum ingots are not on the list, the export cost of downstream aluminum products (such as automotive parts and aluminum foil) may increase sharply. Combined with the unexpected drop in the US manufacturing PMI to 49.5 in March (previously 51.2), concerns about the global aluminum demand outlook have intensified in the market.

Supply and demand game: inventory collapse vs. cost collapse

Inventory hits three-year low, peak season replenishment begins

As of April 7th, the social inventory of electrolytic aluminum in China has dropped to 738000 tons (a weekly decrease of 27000 tons), the lowest level since 2022. Aluminum rod inventory has synchronously declined to 223000 tons, indicating a sustained recovery in demand for building profiles, photovoltaic frames, and other products.

Cost side ‘avalanche’ drags down aluminum prices

Affected by the recovery of bauxite exports from Indonesia, the price of alumina plummeted by 8% in a single week, and the quotation in Henan region fell to 2850 yuan/ton. The complete cost of electrolytic aluminum decreased to below 16600 yuan/ton, and the smelting profit soared to 3200 yuan/ton. Weakening cost support and increasing resistance to aluminum price increases.

Leading trend: Who is racing on the green track? ​​

China Hongqiao (01378. HK) announced today that it will invest in the construction of the world’s first “zero carbon electrolytic aluminum” demonstration line in Yunnan, with plans to start production in 2026. The stock price has risen by over 5% during the trading session.

Yunlv Co., Ltd. (000807. SZ) announced a partnership with CATL to develop “low-carbon battery aluminum foil” and enter the new energy vehicle supply chain. The institution predicts that its revenue from recycled aluminum will exceed 40% by 2025.

International giant layout: Alcoa announced today that it will close high cost smelters in Australia and shift to the Southeast Asian recycled aluminum market, accelerating the trend of global production capacity shifting eastward.

This week’s aluminum price forecast: policy dividends vs. hidden demand concerns

Positive factors

Low inventory+peak season demand: replenishment cycle or support for short-term surge in aluminum prices.

Policy catalysis: Conceptual themes such as recycled aluminum and aluminum under coal are fermenting, and funds may focus on leading stocks.

Negative pressure suppression

Cost collapse: The weak operation of alumina prices may weaken the cost support of electrolytic aluminum.

External demand risk: After the implementation of tariffs on April 10th, aluminum product export orders may be under pressure.