China's Alumina Capacity Expansions to Slow Down Under New Policy

China Alumina

Government Plan Signals Shift in Alumina Market Strategy

China's alumina capacity growth is set to decelerate following a new industrial development plan released in March 2025. The Aluminium Industry High-Quality Development Action Plan (2025–2027) requires new alumina projects to include bauxite mining operations and avoid high-pollution zones.

This move aims to control overheated investments, reduce redundant competition, and enhance domestic resource utilization, according to speakers at a recent CNIA conference. Market participants believe this policy shift will suppress further rapid expansions, especially amid growing signs of alumina oversupply.

Oversupply Risks and Price Volatility Emerging in 2025

China became a net alumina exporter in 2024, with exports rising by 43pc, driven by tight overseas supply and rising global prices. Domestic alumina prices surged to a record Yn5,800/t ($793.49/t) in December, but have since plummeted below Yn4,000/t, leading to negative profit margins.

In the first two months of 2025, output rose 13pc year-on-year to 15.13mn t, as new projects in Guangxi and Shandong added 3mn t/yr of capacity. Industry estimates now forecast a 10mn t/yr rise in total capacity for the year, while aluminium output is expected to grow only 1.2pc, creating a projected 1.3mn t surplus.

CNIA expects alumina production to hit 91mn t in 2025, with exports at 1.5mn t and consumption reaching 88.2mn t. This imbalance highlights the risk of prolonged low prices and margin compression in the sector.

China to Boost Domestic Bauxite and Recycling Capabilities

To support its alumina sector, China plans to expand domestic bauxite resources by 3–5pc by 2027. This includes exploration of coal-bed bauxite and development of low-grade, high-sulphur reserves, traditionally seen as challenging due to environmental concerns.

Shanxi province is likely to be a key site for new bauxite mining under coal beds, as noted by CNIA expert Meng Jie. In 2024, domestic bauxite output dropped 12pc to 73.9mn t, while imports rose 13pc to 159mn t, making up 68pc of total supply.

China will also promote aluminium recycling, aiming to produce 15mn t of secondary aluminium by 2027. This includes industry park development and relaxed import rules for aluminium scrap, supporting the transition to a circular economy in aluminium production.

The Metalnomist Commentary

China’s new alumina policy marks a clear pivot toward sustainability, supply security, and rational investment. While the action plan may cause short-term market disruption, it paves the way for a more integrated and resilient aluminium value chain—anchored in controlled expansion, domestic bauxite development, and circular material flows.