On June 3 local time, the White House issued a statement announcing that US President Trump would raise tariffs on imported steel, aluminum, and their derivative products from 25% to 50%, effective at 00:01 Eastern Time on June 4, 2025. Since the announcement, spot premiums for aluminum in the US Midwest have surged, and LME aluminum has shifted into backwardation.
Macro side, the latest data shows that US CPI figures for May mostly fell below expectations, indicating temporary easing of inflationary pressures. The CPI rose 0.1% MoM, missing the expected 0.2%, while YoY growth stood at 2.4%, in line with market expectations. Core CPI, excluding food and energy, increased 0.1% MoM, below the expected 0.2%, and rose 2.8% YoY, falling short of the anticipated 2.9%. These figures suggest that the US tariff policy has not yet had a significant impact on inflation.
Supply side, China's bauxite production in May reached 5.3664 million mt, up 5.31% MoM and 8.97% YoY. Imports totaled 20.684 million mt in April, rising 25.62% MoM and 45.44% YoY, hitting a record high.
Since May, Guinea's bauxite policies have continued to tighten. The revocation of the mining license for the Axis mine—which produces around 40 million mt annually—has sparked market concerns, as the area was subsequently designated a strategic reserve zone. However, the Guinean government stated that companies meeting certain conditions could reapply during mineral concessions are open in the future. Additionally, industry estimates suggest that even if the Axis mine remains closed this year, China's bauxite imports in 2025 are still expected to meet domestic demand.
Production side, the significant rebound in alumina prices has restored corporate profitability, leading to partial resumptions of previously idled capacity. With further capacity additions, alumina operating capacity is projected to rebound to around 87.95 million mt/year from June onward.
China's aluminum production in May stood at 3.729 million mt, up 2.7% YoY and 3.4% MoM. Operating capacity remained stable MoM, primarily due to the absence of new project launches or large-scale maintenance cuts, coupled with sufficient raw material supply and reasonable profit margins. Domestic aluminum operating capacity is expected to stay high in June.
In April, China's primary aluminum imports totaled 250,500 mt, up 12.8% MoM, while exports reached 13,700 mt, up 54.6% MoM, resulting in net imports of 236,800 mt.
Since June, downstream aluminum processing has faced strong off-season headwinds. The weekly operating rate for aluminum industry enterprises fell 0.4% WoW to 60.9% at the month's start. The primary aluminum alloy sector maintained stable operations with little change from May, while some sample enterprises in the aluminum plate/sheet and strip segment saw lower operating rates, reflecting localized capacity contraction. Market orders in the aluminum wire and cable segment showed divergence, with significant variations in order-taking among enterprises. The aluminum extrusion sector exhibited structural differentiation: operating rates for construction materials and PV frame profiles declined due to seasonal weakness, while orders for 3C, power pipelines, and rail transit remained relatively saturated, providing some support. In the aluminum foil segment, processing fees have hit cost thresholds, forcing enterprises to adopt volume discount strategies under output pressure. The secondary aluminum sector saw declines in both domestic and export orders amid the off-season.
Inventory side, as of June 11, LME aluminum inventory dropped to 357,600 mt, while China's aluminum social inventory fell to 477,000 mt. Globally, aluminum inventory stands at approximately 966,000 mt, down 1.006 million mt YoY, reflecting a clear destocking trend.
Overall, the US tariff policy has not yet significantly curbed domestic inflation, while expectations for US Fed interest rate cuts and a generally weaker US dollar continue to support aluminum prices. Domestically, China's bauxite production from January to May rose YoY, with imports also climbing sharply. Despite policy disruptions in Guinea, ore supply remains ample. Global aluminum inventory has dipped below 1 million mt, persistently hitting record lows and fueling market concerns. In the near term, aluminum prices retain further upside momentum.
Please note that this news is sourced from https://www.cnmn.com.cn/ShowNews1.aspx?id=462555 and translated by SMM.
