China’s aluminium story has always been a study in contradictions. On paper, the country dominates the industry. It produced nearly 43 million tonnes of primary aluminium in 2024, more than half the world’s supply. Yet in the same year, it imported over 3 million tonnes of primary aluminium, largely from Russia. Even more puzzling, China simultaneously exported about 6 million tonnes of semi-manufactured aluminium products, making it the world’s largest exporter of value-added aluminium.
Image source: https://www.omfif.org/
The paradox raises pressing questions as to why the world’s biggest producer and consumer of aluminium needs to import. Why does it continue to export semi-finished goods instead of keeping them at home for its own industries? The answers lie in a mix of capacity caps, pricing dynamics, trade policy, and geopolitics.
Domestic supply at the ceiling, demand still rising
The first explanation is rather simple. Since 2021, Beijing has capped national primary aluminium capacity at 45 million tonnes per year, part of its pledge to control energy consumption and emissions. With smelting notoriously power-hungry, authorities have curbed unchecked expansion in provinces like Inner Mongolia and Xinjiang. By 2024, output had already climbed to 43 million tonnes, leaving little room for further growth without breaching the ceiling.
But demand is galloping ahead. Aluminium is the metal of China’s green transformation. Electric vehicles (EVs), high-speed rail, renewable energy infrastructure, and packaging are all aluminium-hungry sectors. China’s EV production surged past 9 million units in 2024, up 30 per cent year-on-year, each vehicle consuming approximately 250-400 kg of aluminium. Solar PV installations crossed 300 GW of new capacity in 2024, another aluminium-intensive sector in frames and cabling. Construction, still a backbone of domestic demand, absorbed millions of tonnes despite a shaky real estate market.
According to AL Circle estimates, China’s apparent consumption of aluminium was around 32 million tonnes in 2024. However, this headline figure does not fully capture the mismatch: regional smelting disruptions, hydropower shortages in Yunnan, and the need to balance inventories create pockets of undersupply. Imports, therefore, serve as a cushion to keep downstream industries running at full tilt.
Imports as a pressure valve and mediation play
Imports also make sense financially. China’s aluminium market frequently trades at a premium over the international benchmark, the London Metal Exchange (LME). When the Shanghai Futures Exchange (SHFE) price soars above the LME, importers can arbitrage by pulling in cheaper metal from abroad. The result is that shipments flow in not because China lacks capacity, but because it is sometimes cheaper to buy from Russia or the Middle East than to source domestically.
In 2024, China’s primary aluminium imports rose above 3 million tonnes, with Russia accounting for more than half. Arbitrage opportunities combined with targeted shortages explain why China keeps the import door open, even when domestic smelters are at full blast.
Russia: China’s latest aluminium partner
The Russian invasion of Ukraine reshaped global aluminium trade. Western sanctions and restrictions closed the doors for the nation. In 2022, Russia exported about 6.6 million tonnes of primary aluminium, but by 2024, most of that was rerouted eastward. China stepped in as the single largest buyer.
By 2024, over 50 per cent of China’s aluminium imports came from Russia. Rusal has gone further, buying a 30 per cent stake in a Chinese alumina refinery in 2023 to secure raw material access and deepen supply chain integration. The acquisition allows Rusal to gain a proportionate share of HWNM’s 4.8 million tonne annual production, providing access to alumina at potentially competitive prices and mitigating dependence on global commodity markets.
For Beijing, Russian supply serves as a reliable buffer against domestic production caps and energy-related disruptions. For Moscow, China provides a lifeline export market at a time when access to the West has narrowed. The result is a growing Sino-Russian aluminium axis that is reshaping global flows.
Why export if domestic demand is so strong?
If China is struggling to balance demand at home, why export aluminium at all? The answer lies in the structure of its downstream industry.
Over the past two decades, Beijing has encouraged massive investments in rolling mills, extrusion plants, and fabrication units. The result is chronic overcapacity in semi-finished aluminium products, right from sheets and bars to tubes and foils. Industry utilisation rates in some categories have dropped to 40-65 per cent, leaving producers desperate for markets. Export rebates historically made the equation attractive: Chinese producers could sell downstream aluminium abroad at competitive prices, supported by tax incentives.
In 2024, China exported about 6 million tonnes of downstream aluminium products and 3 million tonnes (22 per cent of its primary production) of aluminium-inclusive finished goods. For many Chinese producers, exporting is not a choice but a necessity to keep plants running and recover costs.
Curbing exports to feed domestic needs
Beijing, however, is rethinking this export-heavy model. In late 2024, the Ministry of Finance shocked the market by scrapping value-added tax rebates on semi-finished aluminium exports. This stringent government policy change effectively raised export costs and redirected supply to the domestic market. Within months, China’s semi-finished aluminium exports dropped by 11 per cent year-on-year in early 2025.
On the one hand, Chinese primary aluminium manufacturing firms are ensuring downstream industries like EVs and renewables are well supplied, and avoiding trade frictions with Western economies, which accuse China of dumping. On the other hand, by trimming incentives, Beijing is nudging producers to pivot inward rather than flood foreign markets.
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The future calls: Recycling, green transition, and strategic security
Another layer to this balancing act is China’s ever-increasing emphasis on green transition. Smelting aluminium is carbon-intensive, consuming 13-15 MWh of electricity per tonne. To meet its carbon goals, Beijing has capped primary smelting and is shifting production to hydropower-rich provinces such as Yunnan and Sichuan. But hydropower is vulnerable to seasonal droughts, as seen in 2022 and 2023.
At the same time, China is investing heavily in secondary aluminium. By 2027, it aims to produce 15 million tonnes of recycled aluminium annually, reducing reliance on energy-hungry primary output. Imports serve as a bridge until recycling capacity matures.
Strategically, Beijing is also expanding its overseas footprint. Chinese companies dominate bauxite mining in Guinea and Indonesia, securing the upstream pipeline of raw material. These global investments ensure that even if domestic smelting is capped, raw materials and semi-finished supply chains remain under Chinese influence.
China’s paradox: Exporting while importing — has profound global consequences.
- For Russia, China has become the indispensable buyer.
- For Europe and North America, Chinese exports of semi-finished aluminium continue to pressure domestic producers despite policy restrictions.
China’s aluminium market is far from a straightforward sum of production minus consumption. The official capacity ceiling of 45 million tonnes, combined with rising demand, forces the country to constantly recalibrate supply. When hydropower shortages in Yunnan cut as much as 1.5-2 million tonnes of annualised output in recent years, imports surged to compensate.
Price arbitrage has also been a key driver: Shanghai aluminium often trades at a USD 150-200 per tonne premium over the LME, creating repeated incentives to bring in cheaper foreign metal.
For the global green economy, China’s role is double-edged as it supplies cheap aluminium products for EVs and solar worldwide, but its imports tighten global primary supply, raising volatility on the LME.
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