As of December 29, 2025, Indonesia's bauxite-alumina-aluminum sector is transforming under resource nationalism. The raw bauxite export ban remains, channeling supply to domestic refining and smelting. Key 2025 reforms include the 4th Mining Law Amendment expanding permits to small/cooperative players and downstream-focused firms, annual RKAB reinstatement for production control, SIMBARA digital expansion for real-time tracking, and steep fines (IDR 1.76 billion/ha) for forest-area mining violations to enforce sustainability. Surging demand from EVs, renewables, and the national car initiative drives value addition, positioning Indonesia as a potential global aluminum leader.

Indonesia's bauxite sector is entering 2026 with tightly controlled production volumes under the annual RKAB quota system, expected to remain at or below 2025's restricted 12–15 million tons—well under the industry's 25–30 million ton capacity—to align supply with downstream demand, curb oversupply, and support gradual domestic price recovery. Current prices in West Kalimantan hover at USD 28–32 per ton FOB, significantly below the official HPM benchmark of USD 42, due to structural oversupply, limited alumina refinery intake, and logistical constraints. Enhanced transparency and compliance via the SIMBARA digital platform are effectively eliminating illegal mining, while expanding refinery capacity is projected to lift annual bauxite demand toward 28–30 million tons by late 2026 or 2027. Combined with resilient global aluminum fundamentals, these factors are expected to drive domestic prices toward USD 32–36 per ton or higher in the second half of 2026 and into 2027, fostering improved profitability, industry consolidation favoring larger integrated players, and long-term market stability for compliant producers.

[SMM Aluminum Morning Meeting Minutes: Weakening Fundamentals Exert Downward Pressure, Significant Resistance for Aluminum Prices Upward] Overall, macro sentiment is currently favorable, but fundamentals show signs of weakening in the short term. Operating aluminum capacity is increasing, downstream operating rates are declining, and social inventory of aluminum ingots is building up. These fundamental factors are exerting pressure on aluminum prices. In the short term, macro tailwinds and weak fundamentals are in a tug-of-war, and aluminum prices are expected to hover at highs.

[SMM Cast Aluminum Alloy Morning Comment: Cost Side Surges, Secondary Aluminum Prices Rise Actively] Last Friday, the SMM A00 aluminum price was quoted at 22,020 yuan/mt, up 40 yuan/mt from the previous trading day. The ADC12 price increased by 50 yuan/mt to 22,000 yuan/mt, returning to above 22,000 yuan/mt for the first time since May 2022. Currently, raw material supply remains tight, and aluminum and copper prices continue to fluctuate at highs, with copper prices approaching 100,000 yuan/mt, driving rapid price increases for aluminum scrap, especially aluminum tense scrap. Secondary aluminum alloy suppliers raised their quotes multiple times during the day. On the demand side, signs of weakening emerged, as downstream acceptance of high prices was limited, fear of high prices intensified, and overall market transactions were sluggish. In terms of supply, capacity still faces contraction pressure due to factors such as environmental protection-related controls, insufficient raw materials, or losses. Overall, cost support and supply tightening jointly form a price floor, but slowing demand and aluminum prices fluctuating at highs constrain downstream purchase willingness. The ADC12 price is expected to maintain a fluctuating trend at highs in the short term.

[SMM Analysis: The "Supply-Demand Temperature Difference" Amid the Expansion Wave, Automotive Sheet Industry Competition Map and Breakthrough Prospects] Looking back from 2021 to 2025, from the supply side, by year-end 2025, the number of domestic automotive sheet enterprises with stable production capacity had reached 8, with a combined annual operating capacity of approximately 1 million mt, marking that China has established a large-scale supply system. However, an additional nearly 400,000 mt of capacity is still under construction or commissioning, indicating that supply pressure will persist in the future.

The weekly operating rate of leading domestic aluminum downstream processing enterprises fell 0.6 percentage points WoW to 60.8%. Due to weak orders, environmental protection-related controls, and high aluminum prices, downstream operations further deepened into the off-season. By sector, the operating rate of primary aluminum alloy pulled back 0.4 percentage points to 59.6%.

[SMM Aluminum Morning Meeting Minutes: Macro Tailwinds Compete with Weak Fundamentals, Aluminum Prices Expected to Hover at Highs] Overall, current macro sentiment leans positive, but short-term fundamentals show weakness. Operating aluminum capacity is increasing, downstream operating rates are declining, and social inventory of aluminum ingots is building up. These fundamental factors are exerting pressure on the ceiling of aluminum prices. In the short term, macro tailwinds and weak fundamentals are in a tug-of-war, and aluminum prices are expected to hover at highs.