Recent Fluctuations in International Aluminum Prices

I. Recent Price Movements and Volatility Characteristics

From May to August 2025, international aluminum prices exhibited a volatile pattern of "first suppression, then upward movement, with external strength and internal weakness," primarily influenced by trade policy adjustments, energy cost fluctuations, and supply-demand dynamics.

Specifically, the three-month aluminum price on the London Metal Exchange (LME) was approximately 2,450 per ton in early May. Subsequently, affected by the United States expanding the scope of tariffs on aluminum products to more than 400 commodities (including wind turbines, household appliances, etc.), market sentiment turned bearish, and prices continued to be under pressure, falling to 2,559.5 per ton on August 21, the lowest since August 5. During the same period, the main aluminum contract of the Shanghai Futures Exchange (SHFE) fluctuated downward from around 20,800 yuan per ton, hitting a low of 20,430 yuan per ton on August 21, the lowest since August 4. However, the long-term trend remains resilient. As of August 1, the LME aluminum price was 2,573.35 per ton. Although it has fallen from the four-month high of 2,670 per ton touched on July 24, it still rose 13.69% year-on-year.

Price fluctuations show significant 阶段性特征:

1. May-June: Oscillating Upward: The rising expectation of global economic recovery, coupled with China's electrolytic aluminum production capacity approaching the 45 million tons policy ceiling, the expectation of tight supply drove aluminum prices up. LME aluminum prices once exceeded $2,600 per ton, and SHFE aluminum prices stabilized at 20,700 yuan per ton.
2. July: High-level Correction: The repeated expectations of the Federal Reserve's interest rate cut and China's LPR remaining unchanged for three consecutive months intensified macro policy uncertainty, and aluminum prices pulled back from high levels. LME aluminum prices fell 1.90% in the month, and SHFE aluminum prices gave back some gains.
3. August: Policy Impact Dominates: The implementation of U.S. tariff policies triggered market concerns about shrinking demand, coupled with the weak global manufacturing PMI, aluminum prices came under pressure again. However, high energy costs (such as fluctuations in European natural gas prices) and the advancement of China's green power aluminum projects (encouraging the use of renewable energy) provided bottom support.

II. Analysis of Core Influencing Factors

1. Trade Policy Disturbances

The recent decline in aluminum prices was primarily driven by the U.S. expansion of tariffs on aluminum products. This not only directly increased import costs but also led to the restructuring of the global aluminum trade pattern, with some countries shifting to non-U.S. markets for procurement, exacerbating short-term supply-demand imbalances. For example, Canada accounts for 79% of U.S. aluminum exports, and tariff policies may force Canadian aluminum enterprises to adjust their sales strategies, further affecting international market liquidity.

2. Intertwined Supply-Demand Contradictions
   • Supply Constraints: China's electrolytic aluminum production capacity is close to the ceiling (operating capacity is 44.17 million tons, only 830,000 tons away from the red line), and new supply is limited; overseas production capacity is constrained by energy costs (such as European natural gas prices rising 30% year-on-year) and geopolitics (such as the revocation of bauxite mining licenses in Guinea), and the actual commissioning progress is lower than expected.
   • Demand Differentiation: Demand in traditional fields (such as real estate) is weak, but the explosive growth in new energy fields (new energy vehicles, photovoltaics) forms a hedge. The amount of aluminum used in new energy vehicles is expected to exceed 2.2 million tons in 2025 (250kg of aluminum per vehicle), and 500GW of photovoltaic installed capacity will drive aluminum consumption to exceed 5 million tons, becoming the core engine of demand growth.

1. Cost Support and Inventory Games
   • Energy and Raw Material Costs: Alumina prices continue to rise (domestic Shanxi quoted 3,230 yuan per ton, Guizhou 3,340 yuan per ton), coupled with tight power supply during the dry season in Yunnan, the production cost of electrolytic aluminum has increased, forming bottom support for aluminum prices.
   • Inventory Levels: LME aluminum inventories have recently stabilized at 479,525 metric tons. Although domestic social inventories are in the stage of accumulating stocks in the off-season (expected to approach 550,000 tons at the August high), the absolute level is still lower than the same period last year, indicating that the tight balance between supply and demand remains unchanged.

1. Macroeconomic and Policy Expectations

The Fed's interest rate cut expectations (market expects a 60% probability of a September rate cut) and China's stable monetary policy (LPR unchanged for three consecutive months) affect capital risk appetite. If the Fed cuts rates, it may boost metal demand expectations; while China's targeted support for the real economy through structural tools is conducive to the long-term recovery of aluminum consumption.

III. Future Outlook and Risk Warnings

1. Short-Term (1-3 Months)

Aluminum prices are likely to remain oscillating weakly. The follow-up impact of U.S. tariff policies still needs to be digested, and the weakness of global manufacturing PMI (such as the Eurozone PMI at 45) may 抑制 industrial metal demand. However, cost support (high alumina prices, energy price fluctuations) and low inventory (LME inventory down 28% year-on-year) limit downside risks. It is expected that LME aluminum prices will trade in the range of $2,500-2,650 per ton, and SHFE aluminum prices in the range of 19,500-20,800 yuan per ton.

2. Medium-Term (6-12 Months)

The expected supply-demand gap (JPMorgan predicts a global aluminum market shortage of 600,000 tons in 2025) and the growth of new energy demand (such as the accelerated trend of "aluminum replacing copper") are expected to drive the central price of aluminum higher. If the Fed cuts rates and China's growth-stabilizing policies are intensified, aluminum prices may break through previous highs, with LME target prices potentially reaching $2,850-3,000 per ton and SHFE target prices reaching 21,000-23,000 yuan per ton.

3. Long-Term (1-2 Years)

Under the carbon neutrality goal, aluminum's lightweight properties make it a core candidate for "future metals." Global aluminum demand is expected to maintain an average annual growth rate of 3%-4%, while the supply side is constrained by production capacity ceilings and environmental policies, with a clear long-term upward trend. However, attention should be paid to the risk of overcapacity release (such as the commissioning of Guinea's alumina projects) and the risk of a global economic recession.

IV. Conclusion

Recent international aluminum prices have been under pressure due to trade policy shocks and supply-demand games, but cost support and the resilience of new energy demand have limited declines. In the short term, attention should be paid to the transmission effects of U.S. tariff policies and inventory changes. In the medium term, the focus should be on the pace of global economic recovery and the progress of capacity release. Investors should seize structural opportunities during the volatility, such as focusing on hydropower aluminum enterprises (e.g., China Hongqiao) and the long-term value of high-end aluminum processing sectors (e.g., aviation aluminum-lithium alloys).

Note: The data in this article is as of August 22, 2025. Please refer to real-time information for market dynamics.