By Ulf Bergman
According to recent customs data, Chinese aluminium exports surged by 10.4 per cent year on year in the first five months of the year, with May seeing a growth of 5.7 per cent. The development comes as the flow of the metal from producers in the Arabian Gulf has declined sharply amid the near-total closure of the Strait of Hormuz and damage to two of the world’s major smelters during the conflict.
The disruption to aluminium exports from the Middle East has supported aluminium prices over the past few months, with London Metal Exchange (LME) futures reaching their highest level since 2022 in the first few sessions of June. Concerns over supply disruption contributed to contracts gaining thirty per cent between the end of last year and the beginning of this month.
However, since the peak on the second of June, the futures have faced significant headwinds, with cash contracts shedding around ten per cent over the past week. Concerns over the demand outlook, amid expectations of US monetary tightening on the back of the latest inflation data, contributed to the pressure. At the same time, robust Chinese aluminium exports eased some fears over the global supply situation. Still, despite the recent decline, aluminium prices at the LME remain nearly forty per cent higher than a year ago.
Diverging Paths for Bauxite and Alumina
The global seaborne exports of bauxite, the key feedstock for aluminium production, rose by ten per cent during the year’s first five months compared with the same period last year, according to data from Signal Ocean. However, developments for the world’s two leading exporters, Guinea and Australia, diverged over the period. Shipments from Guinea were sixteen per cent higher than a year ago, while seaborne volumes from Australia declined by seven per cent year-on-year.
China is, by a considerable margin, the world’s largest recipient of seaborne bauxite shipments, accounting for around 85 per cent of global seaborne bauxite imports. Hence, it is hardly surprising that export growth translated into rising Chinese imports over the past five months. Twelve per cent more bauxite was discharged in Chinese ports between January and May than during the same period last year.
However, taking a forward-looking perspective, given the time lags in the seaborne bauxite trade, Signal’s export data for cargoes loading in May bound for China suggest that imports in the coming weeks and months may be somewhat weaker than last year. Following year-on-year growth throughout the first four months of the year, exports destined for China recorded a six per cent decline in May. In addition, Chinese demand for bauxite typically experiences seasonal weakness during the summer months. The near term is also likely to see Australia gain some market share as the rainy season in Guinea poses a challenge for the country’s miners.
Further up the value chain, alumina shipments, unlike bauxite, have seen volumes decline over the first five months of the year. The aggregate was six per cent lower than in the same period in 2025. Much of the decline is attributable to disruptions in and around the Strait of Hormuz, where smelters convert alumina into primary aluminium. Australian exports have been particularly hit, with a year-on-year decline of around twelve per cent.
Implications for Aluminium Prices and Shipping
The increase in Chinese exports of unwrought aluminium and products has tempered the price rise following the hostilities in and around Iran. However, last month’s slowdown in Chinese export growth suggests there are limits to how much the Chinese aluminium industry can offset. Also, bauxite export data suggest that Chinese imports will face some pressure in the near future, coinciding with a seasonal slowdown during the summer months. While China holds substantial bauxite inventories, slowing imports suggest that the recent surge in Chinese aluminium exports may not be sustainable, removing a key source of downward pressure on global prices.
The pressure on global alumina shipments is also likely to support prices. Even if the Strait of Hormuz reopens very soon, aluminium production in the region is unlikely to recover quickly, especially if the sites that turn alumina into aluminium products have been damaged and require significant repairs. Hence, supply concerns will remain and support prices, while pressures on demand amid macroeconomic headwinds will provide an offset.
The bauxite trade is dominated by the capesizes. However, shipments from Australia see greater use of mid-sized vessels than is the case with exports from West Africa. Hence, an expected seasonal slowdown in the face of the rainy season should weigh on demand for the capesizes in the Atlantic, but as most of the Guinean bauxite is bound for China, the tonne-mile should remain substantial.
On the other hand, seaborne alumina exports are typically carried in mid- and smaller-sized tonnage. Hence, as long as the aluminium production sites in the Arabian Gulf remain broadly inaccessible, the decline in demand for seaborne transport will be a negative for the affected dry bulk shipping segments. The net effect is a market split across vessel segments, with capesizes supported to some extent by Guinean bauxite volumes and tonne-mile dynamics, while mid-sized segments face headwinds until Gulf smelters resume operations.
Data source: Ocean Analytics