According to Bloomberg, the latest customs data shows that China's alumina exports in March surged to the second highest level in history, with overseas sales of aluminum raw materials more than doubling year-on-year to 300,000 tons; due to oversupply of alumina, export growth is expected to continue for several months. The Chinese alumina market has seen significant volatility recently. Prices soared last year, but plummeted with the commissioning of new capacity, leading to oversupply and forcing the industry to seek overseas buyers.
This contrasts sharply with other Chinese metal exports, such as steel and aluminum, which face international scrutiny after global market saturation. However, alumina sales are limited to a few major buyers. Russia, which has faced raw material shortages since the invasion of Ukraine, became the largest recipient of Chinese alumina exports last month, accounting for 48%. Rusal, Russia's leading aluminum producer, reached an agreement with a Chinese factory in 2023 to address this gap. Indonesia and the UAE were also important buyers, accounting for 19% and 23% of exports, respectively.
The Chinese government is taking steps to curb overinvestment, including banning the construction of new plants in heavily polluted areas, to address overcapacity. This directive is consistent with policies targeting other overcapacity industries such as copper smelting. The China Nonferrous Metals Industry Association recently criticized the disorderly expansion of the alumina industry, highlighting that China currently has approximately 15 million tons of capacity under construction and more than 20 million tons of capacity planned, which will significantly increase China's existing annual capacity of 107 million tons.
According to Reuters, citing government and corporate sources, the Chinese government has advised South Korean companies not to export products containing Chinese rare earth minerals to US defense companies. The government has warned South Korean companies that they may face sanctions if they do not comply with export restrictions. China produces about 90% of the world's rare earths and has recently imposed export restrictions on these elements in response to US tariffs. Exporters now require permission from the Ministry of Commerce, a process that can be lengthy and opaque. The US has some rare earth reserves, but not enough to indefinitely sustain the supply of defense contractors. South Korea has stated that its reserves of some restricted rare earths exceed six months. South Korean officials are preparing to hold tariff talks with US officials in Washington, while China has warned countries against reaching broader economic agreements with the US that could harm its interests.
