China’s aluminium production continues to run above official limits, supported by stronger prices and shifting raw material dynamics, even as geopolitical tensions disrupt global supply chains.
According to Commerzbank, Chinese aluminium output has risen by roughly 3% year-on-year and is now exceeding the government’s annual production cap. The increase has been driven by higher aluminium prices and improved availability of alumina, a key feedstock in the smelting process.
Analyst Volkmar Baur expects production to remain above 3.75 million tonnes in the coming months, largely due to ongoing disruptions linked to the conflict affecting the Strait of Hormuz. As long as the waterway remains constrained, supply interruptions across the Gulf region are likely to persist, limiting exports of both raw materials and finished aluminium.
The situation has tightened global supply, contributing to a roughly 9% rise in aluminium prices since the conflict began. At the same time, the market is facing a surplus of alumina, much of which would typically be shipped to Gulf-based smelters. This excess availability has further supported Chinese production by lowering input constraints.
With margins improving, Chinese smelters have strong incentives to maintain elevated output levels in the near term. However, Commerzbank cautions that unless Beijing formally raises its production cap, the current pace may not be sustainable. Output reductions could be required later in the year to bring production back in line with regulatory limits.
In the short term, the combination of firm aluminium prices and abundant alumina continues to make above-cap production economically attractive, reinforcing China’s role as the stabilizing force in an increasingly disrupted global aluminium market.
