17 hours Ago By Bloomberg News
(Bloomberg) — Aluminum smelters in China, the world’s biggest producer, are set to enjoy a sharp rebound in profits this year as the cost of their key raw material, alumina, plunges. Brighter domestic prospects for firms such as Aluminum Corp. of China Ltd.
and China Hongqiao Group offer significant respite to international trade clouded by the threat of tariffs. US President Donald Trump’s 25% levy on imports of the lightweight metal starts on Wednesday, driven in part by concerns that China is flooding the world market. China also removed its tax rebate on overseas sales in December, narrowing profits for exporters.
After nearly doubling in 2024 to a record high of 5,770 yuan ($795) a ton, the price of alumina has dived as new capacity is brought online. The industry’s response follows a string of disruptions to the mineral’s sprawling supply chain, which takes in operations from Jamaica to Guinea, Australia and China. The market could drop below 3,000 yuan a ton later this year, said Zhang Meng, an analyst with AZ China Ltd.
The stunning roundtrip would leave prices at their weakest since the end of 2023. Chinese smelters were losing about 900 yuan on each ton of aluminum produced in December, with alumina accounting for more than half their costs, according to Bloomberg Intelligence. In February, the margin was back to over 4,000 yuan a ton.
Some 13.2 million tons of Chinese alumina capacity is in the pipeline for this year, which will swing the market from a deficit to a surplus, BI analyst Michelle Leung said in a note last week. Demand for aluminum remains solid, driven by usage in the clean energy and car sectors.
Supply, meanwhile, is subject to China’s capacity cap of 45 million tons, further supporting prices. On the Wire China has adopted a pragmatic approach to set minimal 2025 climate targets after last year’s shortfall, and as coal is set to remain a key energy source, according to Bloomberg Intelligence. Washington and Beijing have begun discussions about a potential “birthday summit” in June in the U.
S. between President Trump and Chinese leader Xi Jinping, the Wall Street Journal reported, citing people familiar with the matter. China’s weekend move to impose tariffs on Canadian rapeseed products has sent prices for the crop plunging, adding more uncertainty to global food flows that are being buffeted by a series of trade wars.
Muyuan Foods Co., one of the world’s biggest pig breeders and pork producers, is considering a second listing in Hong Kong that may help it to raise at least $1 billion. This Week’s Diary (All times Beijing unless noted.
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