SMM: China's Aluminum Extrusion to Slightly Rise in the Future, New Energy-Related Demand Remains the Most-Traded Contract [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. China's Aluminum Extrusion Supply and Demand Situation China's aluminum extrusion industry has experienced rapid development over the past decade, with promising prospects for lightweight extrusions required by NEVs and aluminum extrusions for PV applications. In the future, the demand for construction extrusions is expected to decline as the real estate sector slows down, while the demand for industrial extrusions will increase, with aluminum usage in PV, automotive, machinery equipment, and durable goods sectors growing year by year. ►SMM Analysis: China's aluminum extrusion industry has shown rapid growth over the past decade, and it is expected to rise slightly from 2024 to 2028. By sector, construction extrusions are projected to decrease slightly. Since 2022, the real estate industry has faced a severe downturn, with many domestic real estate companies experiencing credit contraction from multiple creditors, frequent project delays, and declining consumer confidence in home purchases, leading to a sharp drop in construction extrusion production. Under recent macro policy adjustments in the real estate sector, downstream demand is expected to remain weak. Looking ahead, SMM predicts that construction extrusion production will show a slight downward trend, decreasing 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 After 2018, with the significant increase in aluminum usage in automotive, PV, and rail transportation sectors, many outdated capacities actively transitioned to industrial extrusions, revitalizing the aluminum extrusion industry. From 2023 to 2028, SMM expects industrial extrusion production to rise significantly, from 9.88 million mt to 15.91 million mt, with an annual compound growth rate of 10%. China's Aluminum Extrusion Demand Analysis The overall trend of China's aluminum extrusion downstream demand is upward. In the future, the demand for construction extrusions will decline as the real estate sector slows down, while the demand for industrial extrusions will increase, with aluminum usage in PV, automotive, machinery equipment, and durable goods sectors growing year by year. ►SMM Analysis: In terms of construction extrusions, dragged down by the real estate sector, the next two years will still be in a recovery and repair process. The usage of construction extrusions may continue to decline, although many construction extrusion companies are expanding high-value-added orders related to system doors and windows, the overall proportion is relatively small. Although there is some potential in niche markets, the overall demand for construction extrusions will be limited. In the future, as the construction extrusion industry clears out, many small enterprises will reduce or stop production, and new capacity investments will decrease. In terms of industrial extrusions, PV extrusions and transportation extrusions are the main demand areas, while general industrial demand will maintain slow growth. Since the domestic "carbon peak and carbon neutrality" goals were proposed, the PV industry has entered a policy environment of strong support and long-term friendliness. In the coming years, both domestic and overseas PV demand will be robust. 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 competitiveness. Due to their high specific strength, high weight reduction rate, and excellent corrosion resistance, aluminum alloy extrusions are increasingly used in automobiles. The demand growth for general industrial extrusions will slow down in the coming years. General industrial extrusion products are relatively scattered, involving 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 a small portion of demand still relies on imports, resulting in a tight supply-demand situation. New Energy-Related Demand Remains the Main Growth Driver Transformation of China's Aluminum Extrusion Enterprises Dragged down by the real estate sector, 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 directions. ►SMM Analysis: Considering the downturn in the construction industry, some extrusion manufacturers have started to transition to industrial extrusions in recent years. Due to the low technical barriers in PV extrusion production, it has become the first choice for many manufacturers. However, with the slowdown in the PV industry, many extrusion companies face the challenge of transitioning again to other industrial extrusions, such as automotive, ESS, and military sectors. In terms of equipment, some transitioning extrusion companies have added 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 takes a long time. A typical example is Huajian Aluminum, which has expanded into the automotive extrusion market while cooperating with wind power companies to produce wind turbine component housings and operation platforms. China's Aluminum Extrusion Import and Export Analysis China is a net exporter of aluminum extrusions, with the overall trend of aluminum extrusion exports increasing, but slightly fluctuating due to overseas anti-dumping policies. In 2023, China's total aluminum extrusion exports were 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 because China's high-end aluminum extrusion processing technology lagged behind foreign countries, and some high-end aluminum extrusion demands in machinery equipment, aerospace, and other sectors relied on imports. In recent years, with the increase in 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 negative policies overseas targeting China have shown an increasing trend, with many countries successively imposing additional tariffs on Chinese aluminum extrusions, bringing certain negative impacts on domestic aluminum semis exports. Additionally, from the perspective of aluminum semis export profits, in H2 2024, aluminum prices showed a trend of the domestic market outperforming the overseas market, with domestic aluminum extrusion export profits fluctuating rangebound, and export enterprises and overseas orders showing insufficient willingness to increase. In 2024, extrusion exports will be difficult to find incremental growth, and may mainly maintain a downward trend. Domestic: US-China Trade War Escalates, Future Chinese Aluminum Semis Exports May Decline Aluminum Semis Exports: Tariff War Resumes, Short-Term Chinese Aluminum Semis Exports May Weaken In February 2025, China's cumulative exports of unwrought aluminum and aluminum semis were 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, domestic aluminum processing enterprises' export orders are showing a weakening trend, and it is expected that short-term aluminum semis exports will decline. SMM has learned that China's direct exports to the US are limited, but there are many indirect exports, such as aluminum semis or parts processed and assembled in third countries before entering the US. Therefore, it is necessary to be vigilant about tariff increases, which may lead to an overall weakening of overseas demand and a decline in China's indirect exports. Supply-Demand Balance Table: Limited Global Supply Increase in 2025, Impact of Overseas Demand Recovery May Be Reflected ►SMM Analysis: For the whole year of 2025, domestic supply is gradually approaching its ceiling, with production growth narrowing to around 2.1%. At the same time, the development of new energy and other aspects in China 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 whole year of 2025. As aluminum prices maintain a trend of the overseas market outperforming the domestic market, net imports may decline this year, putting pressure on the supply side, and the domestic supply-demand balance will continue to be tight throughout the year. Overseas, the pressure from new capacity in Southeast Asia remains, and the overseas aluminum supply has shown significant improvement; overseas demand is also in a recovery phase. It is expected that the global supply-demand balance in 2025 may be tight, and it is necessary to be vigilant about global policy adjustments on carbon emissions in the aluminum industry. Low-Carbon Aluminum End-Use Demand Market Matures, Forcing Enterprises to Reform Raw Material Structure According to SMM surveys, enterprises represented by OEMs and 3C companies have increasingly higher demands for "green and low-carbon raw materials" in recent years, forcing aluminum processing enterprises to use green electricity and adopt low-carbon aluminum. The requirements for "energy saving and carbon reduction" are increasingly impacting aluminum processing. Common Ways 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 situation of old scrap may ease in the future; the new capacity of recycled wrought alloys is surging, and new projects are being laid out in areas with concentrated aluminum scrap. 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