On June 3 local time, the White House of the United States issued a statement saying that US President Trump announced that the tariffs on imported steel, aluminum and their derivatives would be raised from 25% to 50%. This tariff policy will take effect at 00:01 a.m. Eastern Time on June 4, 2025. Since the announcement of this tariff policy, the spot premium of electrolytic aluminum in the Midwestern United States has risen significantly, and the LME aluminum spot has also turned to a premium state.
On a macro level, the latest data shows that in May, most of the US CPI figures were lower than expected, indicating that inflationary pressure has temporarily eased. In May, the US CPI rose by 0.1% month-on-month, falling short of the expected 0.2%. It increased by 2.4% year-on-year, in line with market expectations. Core CPI excluding food and energy rose by 0.1% month-on-month, lower than the expected 0.2%. It increased by 2.8% year-on-year, which was lower than the expected 2.9%. Judging from the above data, at present, the US tariff policy has not yet had a significant impact on inflation.
In terms of supply, in May, China's bauxite output was 5.3664 million tons, increasing by 5.31% month-on-month and 8.97% year-on-year. In terms of imports, in April, China imported 20.684 million tons of bauxite, a month-on-month increase of 25.62% and a year-on-year increase of 45.44%, setting a new historical record.
Since May, Guinea's bauxite policy has continued to tighten. Among them, the revocation of the mining license for the Axis mining area has raised market concerns - the mining area produces approximately 40 million tons of bauxite annually and was subsequently designated as a strategic reserve area. However, the Guinean government stated that if enterprises meet the conditions, they can reapply when the mineral concession rights are opened in the future. In addition, according to relevant institutions' estimates, even if the Axis mining area fails to resume operations within this year, China's bauxite imports in 2025 are still expected to meet domestic demand.
In terms of production, with the significant rebound in the price of alumina, the profit situation of enterprises has been restored, which in turn has led to the partial resumption of production capacity that was previously reduced due to maintenance. With the further release of new production capacity, it is expected that the operating capacity of alumina will rebound to around 87.95 million tons per year starting from June.
In May, China's electrolytic aluminum output was 3.729 million tons, up 2.7% year-on-year and 3.4% month-on-month. In May, the operating capacity of domestic electrolytic aluminum remained stable month-on-month. The main reasons for this were that no new projects were implemented at present, and there were no large-scale maintenance or production cuts. The supply of raw materials was sufficient, and the profits of enterprises remained at a reasonable level. It is expected that the domestic electrolytic aluminum operating capacity will remain at a high level in June.
In April, China's import volume of primary aluminium was 250,500 tons, increasing by 12.8% month-on-month. The export volume was 13,700 tons, increasing by 54.6% compared with the previous period, and the net import was 236,800 tons.
Since June, the downstream aluminum processing industry has been experiencing a strong off-season atmosphere. At the beginning of the month, the weekly operating rate of aluminum industry enterprises decreased by 0.4% month-on-month to 60.9%. Among them, the operating rate of enterprises in the primary aluminum alloy industry changed little compared with May and maintained a stable operation. The operating rates of some sample enterprises in the aluminum sheet and strip sector have declined, reflecting the contraction of local production capacity. The market order performance of the aluminum cable sector is somewhat differentiated, and the indirect order situations of different enterprises vary significantly. The operation of the aluminum profile sector shows a structural differentiation. Due to the traditional off-season, the operation rates of enterprises in the building materials and photovoltaic frame profiles sectors have declined. However, orders in the 3C field, power pipelines, and rail transit are relatively saturated, providing certain support for the operation of enterprises. The current processing fee of the aluminum foil sector has reached the cost red line. Under the pressure of total volume assessment, enterprises are forced to adopt the strategy of "trading price for volume". Due to the off-season, both the domestic market and export orders for recycled aluminum sheets have declined to varying degrees.
In terms of inventory, as of June 11th, the LME aluminum inventory dropped to 357,600 tons, and the domestic aluminum social inventory decreased to 477,000 tons. From the perspective of the global aluminum inventory composition, currently, the global aluminum inventory is approximately 966,000 tons, a decrease of 1.006 million tons compared to the same period last year, indicating a significant trend of inventory reduction.
Overall, at present, the US tariff policy has not yet had a significant curbing effect on domestic inflation. This year, the expectation of the Federal Reserve cutting interest rates persists and the overall trend of the US dollar weakens. All these factors provide favorable support for aluminum prices. Domestically, from January to May, the output of domestic bauxite increased compared with the same period in 2024, and the import volume also rose significantly. Despite the disturbance in Guinea's bauxite policy in May, the loose supply situation at the ore end has not changed for the time being. At present, global aluminum inventories have dropped below 1 million tons, continuously setting new historical lows and raising market concerns. In the short term, there is potential for aluminum prices to further strengthen.
