SMM: China's Aluminum Extrusion to Slightly Rise in the Future, New Energy-Related Demand Remains the Main Growth Driver [SMM Aluminum Industry Conference]

On April 18, at the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo - Industrial Aluminum Extrusion Forum, co-hosted by SMM Information & Technology Co., Ltd., SMM Metal Trading Center, and Shandong Aisi Information Technology Co., Ltd., and co-organized by Zhongyifeng Jinyi (Suzhou) Technology Co., Ltd. and Lezhi County Qianrun Investment Service Co., Ltd., Yao Kexin, Senior Analyst of Aluminum Products at SMM, analyzed the Chinese industrial aluminum extrusion market. **Supply and Demand of Aluminum Extrusions in China** China's aluminum extrusion industry has experienced rapid development over the past decade, with promising prospects for lightweight extrusions for NEVs and aluminum extrusions for PV applications. While demand for construction extrusions is expected to decline due to the slowdown in the real estate sector, demand for industrial extrusions is set to increase, driven by growth in PV, automotive, machinery equipment, and durable goods sectors. **SMM Analysis:** China's aluminum extrusion industry has seen rapid growth over the past decade, and it is expected to experience a slight increase from 2024 to 2028. By sector, construction extrusions are projected to decline slightly. Since 2022, the real estate industry has faced a severe downturn, with many domestic real estate companies grappling with credit contraction from multiple creditors, frequent project delays, and declining consumer confidence in home purchases. This has led to a sharp drop in the production of construction extrusions. Under the macro policy adjustments in the real estate sector, downstream demand is expected to remain weak. Looking ahead, SMM predicts a slight decline in the production of construction extrusions, from 10.96 million mt in 2023 to 8.69 million mt in 2028, with an annual compound growth rate of -4.5%. The PV industry has a bright future. After 2018, with the significant increase in aluminum usage in the automotive, PV, and rail transportation sectors, many outdated capacities have actively transitioned to industrial extrusions, revitalizing the aluminum extrusion industry. From 2023 to 2028, SMM expects a substantial increase in the production of industrial extrusions, from 9.88 million mt to 15.91 million mt, with an annual compound growth rate of 10%. **Demand Analysis of Aluminum Extrusions in China** The overall trend for downstream demand for aluminum extrusions in China is upward. While demand for construction extrusions is expected to decline due to the slowdown in the real estate sector, demand for industrial extrusions is set to increase, driven by growth in PV, automotive, machinery equipment, and durable goods sectors. **SMM Analysis:** In the construction extrusion sector, dragged down by the real estate industry, the next two years will still be a period of recovery and repair. The usage of construction extrusions continues to decline. Although many construction extrusion companies have expanded into high-value-added orders such as system doors and windows, the overall proportion remains relatively small. While there is some potential in niche markets, the impact on the overall demand for construction extrusions is limited. In the future, although the construction extrusion industry will see market exits, with many small enterprises reducing or halting production and new capacity investments decreasing. In the industrial extrusion sector, PV extrusions and transportation extrusions are the main demand areas, while general industrial demand is expected to grow slowly. Since the introduction of China's "carbon peak and carbon neutrality" goals, the PV industry has entered a policy environment of strong support and long-term friendliness. Both domestic and overseas PV demand is expected to remain robust in the coming years. With the urgent need for environmental protection and energy efficiency, internal combustion engine vehicles need to reduce fuel consumption and emissions to improve efficiency, while NEVs need to reduce weight and power consumption to increase driving range and enhance competitiveness. Due to their high specific strength, weight reduction rate, and excellent corrosion resistance, aluminum alloy extrusions are increasingly used in the automotive sector. The demand for general industrial extrusions is expected to slow in the coming years. General industrial extrusion products are relatively scattered, covering various fields. High-end sectors such as aerospace and military have higher requirements for alloy raw materials and extrusion processes, creating certain technical barriers. There are few domestic producers, and some demand still relies on imports, leading to a tight supply-demand balance. **New Energy-Related Demand Remains the Main Growth Driver** **Transformation of Chinese Aluminum Extrusion Enterprises** Dragged down by the real estate industry, some extrusion companies originally focused on construction materials are attempting to transition to industrial extrusions, with PV extrusions becoming the first choice. Recently, due to the slowdown in PV growth, some companies have adopted new CNC and extrusion equipment and engaged with end customers to attempt a transition to other industrial extrusion sectors. **SMM Analysis:** Considering the downturn in the construction industry, some extrusion manufacturers have started transitioning to industrial extrusions in recent years. Due to the lower technical barriers in PV extrusions, they have become the preferred choice for many manufacturers. However, with the slowdown in the PV industry, many extrusion companies face the challenge of transitioning again to other industrial extrusion sectors, such as automotive, ESS, and military. In terms of equipment, some transitioning extrusion companies have installed new CNC machining centers and industrial extrusion machines. In terms of customers, extrusion manufacturers with transition intentions have also established connections with automakers, but becoming a supplier to automakers requires a lengthy certification process, which is time-consuming. A typical example is Huajian Aluminum, which has expanded into the automotive extrusion market while collaborating with wind power companies to produce wind turbine component housings and operation platforms. **Import and Export Analysis of Aluminum Extrusions in China** China is a net exporter of aluminum extrusions, with an overall increasing trend in exports, albeit with slight fluctuations due to overseas anti-dumping policies. In 2023, China's total aluminum extrusion exports reached 916,000 mt, with Vietnam, the Philippines, Israel, Australia, and Malaysia being the main export destinations. **SMM Analysis:** On the import side, before 2016, China's aluminum extrusion imports remained at a relatively high level, mainly due to the lag in high-end aluminum extrusion processing technology compared to foreign countries. High-end aluminum extrusions for machinery equipment, aerospace, and other sectors relied on imports. In recent years, with increased R&D investment in industrial extrusions and the updating of extrusion equipment, the self-sufficiency rate of high-end industrial aluminum extrusions has been continuously improving, leading to a decline in overall import dependence. It is worth noting that recent overseas negative policies towards China have intensified, with many countries imposing additional tariffs on Chinese aluminum extrusions, which has had a certain negative impact on domestic aluminum exports. Additionally, from the perspective of aluminum export profits, in H2 2024, the domestic aluminum market outperformed the overseas market, leading to rangebound aluminum extrusion export profits and insufficient willingness among export enterprises and overseas orders to increase. In 2024, it will be difficult to find incremental growth in extrusion exports, and the trend is likely to remain downward. **Domestic: Escalation of the US-China Trade War May Lead to a Decline in China's Aluminum Exports** **Aluminum Exports: Tariff War Resurfaces, Short-Term Aluminum Exports May Weaken** In February 2025, China's cumulative exports of unwrought aluminum and aluminum products reached 408,000 mt, down 9.53% MoM and 12.70% YoY. From January to February 2025, cumulative exports reached 859,000 mt, down 11.0% YoY. **SMM Analysis:** Currently, the price spread between domestic and overseas markets is narrowing rapidly, coupled with the impact of domestic and overseas tax policies, leading to a weakening trend in export orders for domestic aluminum processing enterprises. It is expected that aluminum exports will decline in the short term. SMM has learned that China's direct exports to the US are limited, but there are many indirect exports, such as aluminum products or parts processed and assembled in third countries before entering the US. Therefore, it is necessary to be vigilant about tariff increases, which could lead to an overall weakening of overseas demand and a decline in China's indirect exports. **Supply-Demand Balance Table: Limited Global Supply Growth in 2025, Impact of Overseas Demand Recovery May Be Felt** **SMM Analysis:** For the full year of 2025, domestic supply is gradually approaching its ceiling, with production growth narrowing to around 2.1%. Meanwhile, the development of new energy and other sectors will continue to drive primary aluminum consumption, but traditional construction sector aluminum usage is still expected to decline. SMM expects a 1.5% increase in aluminum consumption for the full year of 2025. As the LME outperforms SHFE, net imports may decline this year, putting pressure on the supply side, and the domestic supply-demand balance will remain tight. Overseas, the pressure from new capacity in Southeast Asia remains, and the recovery in overseas supply is evident. Overseas demand is also in a recovery phase. It is expected that the global supply-demand balance will be tight in 2025, and it is necessary to be vigilant about global policy adjustments on carbon emissions in the aluminum industry. **Mature Market for Low-Carbon Aluminum End-Use Demand Forces Enterprises to Reform Raw Material Structure** According to SMM surveys, enterprises represented by OEMs and 3C companies have increasingly demanded "green and low-carbon raw materials" in recent years, forcing aluminum processing enterprises to use green electricity and low-carbon aluminum. The requirements for "energy saving and carbon reduction" are having an increasing impact on aluminum processing. **Common Methods for Aluminum Processing Enterprises to "Save Energy and Reduce Carbon":** 1. Use aluminum ingots produced with green electricity. 2. Use aluminum scrap. 3. Use green electricity. **Expanded Use of Aluminum Scrap** The demand for aluminum scrap in the aluminum processing sector is increasing due to end-use carbon reduction requirements. The proportion of domestic old scrap is rising, and the tight supply of old scrap may ease in the future. The surge in new capacity for wrought alloy recycling and the layout of new projects in aluminum scrap concentration areas are also discussed. **Appendix: Introduction to the Aluminum Industry Chain** **Click to view the special report on AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo.**