Market volatility and geopolitical risks drive China’s aluminium prices higher

The past week has been all about the dynamic shift driven by rising domestic prices, US tariff policies, and fluctuating supply-demand dynamics in the global aluminium market. According to various news platforms, Chinese aluminium spot prices have hiked to RMB 20,524 per tonne (USD 2,862 per tonne) in South China, followed by RMB 20,504 per tonne (USD 2,859 per tonne) in East China. Both the regions were separately up 1.67 per cent and 1.65 per cent week-on-week.

This increase was fuelled by a 0.84 per cent gain in LME prices to USD 2,636 per tonne, trending higher by 1.51 per cent week-on-week along with stronger downstream demand.

Meanwhile, a potential speed-breaker looms as the US, under the Trump administration, has imposed a 10 per cent tariff from February and intends to slap another 25 per cent tariff on all Chinese aluminium imports (as part of global import). Analysts have predicted that this policy is threatening a decrease in Chinese exports to the North American nation, subsequently leading to a reduction in the US market supply, and driving up domestic US prices.

Market dynamics and outlook: Volatility with geopolitical risks

Aluminium producers in China saw profits surge due to falling alumina costs, which dropped 9.19 per cent W-o-W to RMB 3,535.89 per tonne (USD 493 per tonne). Yet, continuous price declines are tightening margins for alumina suppliers, signalling possible supply adjustments ahead.