Bright Future for Aluminium Prices in 2025? China’s Production May Slow Down

SEATTLE (Scrap Monster):  Slower growth in production in China is likely to drive aluminium prices higher in the coming years, experts at Commerzbank AG said. 

The aluminium price experienced ups and downs in 2024, but those were not as pronounced as in copper. 

Aluminium prices on the London Metal Exchange had climbed to $2,800 per ton at the end of May, which remains this year’s high for the metal. 

“The price was still a long way from its all-time high of over USD 4,000 in spring 2022 after the outbreak of war in Ukraine, but so far this year, aluminium has actually performed slightly better than copper with a gain of around 6.5% since the start of the year,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a note. 

Lambrecht expects prices to continue its climb next year, and the metal to establish around the $2,800 per ton mark in the second half of 2025. 

Slowdown in China’s aluminium production

China accounts for 60% of global primary aluminum production and 50% of total aluminium production, according to Commerzbank. 

China has expanded its aluminum production in recent years. 

This year, too, a new monthly record was set in August with 3.73 million tons and most recently in November daily following the ramp-up of new capacities, according to the German bank. 

However, there are signals of a slowdown in production. 

 The rise in input prices could prompt the plants to slow down production. The price of alumina contracts on the Shanghai Stock Exchange jumped by 50% between August and December. 

This is likely to increase input costs and also reduce the margins of producers. 

Meanwhile, China’s National Reform Commission presented plans to reduce emissions in the aluminium industry at the beginning of July. 

New coal-fired smelters will no longer be approved and no new aluminium smelting capacity will be built in regions with stricter emissions controls under this plan. 

 Courtesy: www.tradingview.com