In-Depth Analysis of China's Aluminum Processing Industry: Hot Topics and Future Development Trends [SMM Aluminum Industry Conference]

On April 17, at the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo - Main Forum, jointly organized 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., Mo Xinda, Director of the Light Metals Department of the China Nonferrous Metals Industry Association and Deputy Secretary General of the Aluminum Branch, shared the theme "In-depth Analysis of China's Aluminum Processing Industry: Hot Topics and Future Development Trends."

► Bauxite
Guinea exported 146 million mt of bauxite in 2024, with China importing 110 million mt from Guinea, accounting for 70% of total imports. He also analyzed the average import unit price of bauxite and the price trend of alumina.

► Aluminum
Supply-side structural reform + large-scale transformation + green transformation

► Secondary Aluminum
Secondary aluminum continues to increase. In 2024, secondary aluminum production reached 10.55 million mt, up 8.9% YoY. Secondary aluminum is shifting towards applications in wrought aluminum alloys. With the integration of secondary aluminum and aluminum processing, it is expected that by 2025, the usage of secondary aluminum in the field of wrought aluminum alloys will exceed 50%. Secondary aluminum is transitioning towards grade preservation and closed-loop recycling.

► Overseas Investment
• Full industry chain layout
• Proactive and passive actions
• Concentrated investment
• High popularity remains

► I. Overview of the Processing Industry
China's aluminum processing equipment level is internationally leading, with a complete range of products.
• Significant late-mover advantage in equipment. Extrusion (over 300 imported), hot rolling (over 200 lines), cast rolling (about 1,000 units), continuous casting and rolling (2 lines), foil rolling (over 600 units), covering internationally renowned brands such as UBE, SMS, Minox, Danieli, Voestalpine, and Aschenbach.
• Domestic equipment manufacturing capabilities have significantly improved. Achieving import substitution while exporting in bulk.
China's aluminum processing layout is based domestically, with consideration for overseas, showing a significant trend towards globalization.

II. Situation Observation - Foreign Trade
Aluminum is an important trade surplus product among non-ferrous metals. In 2024, the export volume of aluminum semis and products hit a record high, with total overseas consumption exceeding 10 million mt. He introduced that the export market for aluminum semis and products is relatively dispersed. Trade friction is a byproduct of increased export competitiveness.

► The foreign trade situation is severe, and trade friction has become the norm.
• Numerous: Uninterrupted and more frequent (over 80 cases).
• Various types: Conventional practices are more frequent: anti-dumping, anti-subsidy, double anti, anti-circumvention, US 301, 232; New methods are emerging: US Xinjiang-related Act, EU Carbon Border Adjustment Mechanism, EU Circular Economy Action Plan, etc.
• Wide regions, most intensive in the US and Europe: US, Europe, Canada, Australia (ongoing); Southeast Asia (heating up); South America, Eurasia, GCC (increasing).
• Complex situation: Bilateral to multilateral; traditional markets to emerging markets; economic to pan-political; continuously enriched toolbox (design, standards, equipment, enterprises).
He indicated that there are still many uncertain factors...

II. Situation Observation - Carbon Constraints
► EU Carbon Border Adjustment Mechanism (CBAM)
Timetable:
• October 2023 - the end of 2025: Transition period
• 2026: Start of carbon fee collection - carbon fees are paid by EU importers
Products involved: Aluminum in CBAM includes unwrought aluminum, aluminum semis, and some aluminum products.
CBAM influencing factors:
CBAM = (Actual carbon content of exported products - Free quota of EU products) X (EU carbon price - Export country carbon price).

II. Situation Observation - Carbon Constraints
We judge that CBAM will have no impact in the short term, and limited direct impact in the long term:
• Currently only includes direct emissions, and the direct emission levels of various countries are not significantly different
• If indirect emissions are not taxed, there is no difference in CBAM carbon fee accounting between using thermal power aluminum and green power aluminum
• Using secondary aluminum raw materials can significantly reduce carbon emissions (secondary = 3-5% of primary)
• The EU market futures are relatively limited
UK version of CBAM: Time: 2027, Scope: Direct emissions + indirect emissions.

► Aluminum is about to be included in the national carbon emission trading unified market
According to the work arrangement of the Ministry of Ecology and Environment, the aluminum industry is about to be included in the national carbon emission trading market management.
• Regarding the coverage of greenhouse gases, the controlled gases in the aluminum industry are carbon dioxide, carbon tetrafluoride, and hexafluoroethane;
• Regarding the scope of carbon emissions, only greenhouse gas emissions directly generated by the use of fossil fuels are traded, including carbon emissions from anode consumption and anode effects;
• Regarding quota allocation, the number of free quotas obtained by enterprises is linked to product production (output).
• We judge that the net consumption of carbon anodes will be the core factor affecting the surplus or shortage of carbon trading quotas for aluminum enterprises. Improving the quality of carbon anodes is crucial and imperative.

► End-users' independent carbon reduction cannot be separated from material support
He cited cases of carbon reduction by BMW, Apple, and Tetra Pak China.

III. Several Views
1. Professional development will be the focus of building comparative advantages in China's aluminum processing.
• Largest, strongest, but also the most difficult (competition, "tariff war", cancellation of export tax rebates);
• Investment needs to be rational!!! Development momentum should be based on market demand, not just on becoming a large enterprise or based on government demand;
• Future development should not pursue being large and comprehensive, but should be based on specialization and refinement;
• Attention should be paid to cultivating new quality productive forces (emphasis on technology, products, and applications);
• Persistently expand applications (substitution and anti-substitution, seeking increments).

2. Improving the ability and spirit of struggle is crucial to fully consolidating the export market.
• Fully utilize the four-body linkage mechanism to fully respond to trade friction
• Diversify export countries
• Extend the industry chain to improve the competitiveness of export products
• Go global?
• China's aluminum consumption needs overseas markets, and global aluminum consumption cannot do without Chinese products!

3. Attach great importance to green development and strive to build future competitive highlands.
• Continuously enrich the green development toolbox, and incorporate green and low-carbon work into the governance system of industry enterprises
Ø Improve energy efficiency (technical equipment transformation and upgrading, application of graphitized cathodes, etc.)
Ø Green power aluminum (25.2%; market transactions, self-built, generation-grid-load-storage)
Ø Secondary aluminum (production of 10.55 million mt; grade preservation recycling is more important)
Ø Carbon trading (production/electricity consumption; strive to sell quotas)
Ø Domestic sales/export (do a good job in resource allocation)
Ø CCER (has been restarted)
Ø Financial derivatives (integration of industry and finance)
Ø ......

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