2026 Aluminum Industry Chain Outlook: Ample Supply, Rising Costs

I. Ample Bauxite Supply Despite Rising Shipping Costs

my country's bauxite production in February was 4.7567 million tons, down 10.92% month-on-month but up 6.13% year-on-year, indicating ample domestic supply. Regarding imported ore, my country imported 14.67 million tons of bauxite in December, down 2.88% month-on-month and 2.02% year-on-year, also indicating ample supply. However, rising shipping costs have led to a gradual increase in shipping costs due to rising crude oil prices.

In terms of new capacity, the main increase in global bauxite production in 2026 will still be in Guinea. Based on the expected increase in production from existing, resumed, and expanded enterprises in Guinea, the global bauxite supply is projected to increase by approximately 40-50 million tons in 2026. Excluding potential policy disruptions, the bauxite market supply is expected to remain ample in 2026.

II. Alumina Supply Pressure Remains, But Costs Rise

In February, my country's metallurgical-grade alumina production was 6.6002 million tons, down 10.63% month-on-month and 0.05% year-on-year. A large-scale production cut by a company in northern China in mid-February, coupled with equipment maintenance and production line upgrades by some companies, and reduced operating loads by some companies in the south, led to a slight contraction in overall monthly production. In March, some companies may continue maintenance and production line upgrades, and the industry will enter a phase of destocking. However, new production capacity in Guangxi is gradually being released, offsetting some of the reduction, and overall operating capacity is expected to show a slow downward trend.

Regarding new capacity, a large amount of alumina capacity will still be released domestically and internationally in 2026. It is estimated that approximately 15 million tons of new domestic capacity will be added, mainly in Guangxi and Hebei provinces, while approximately 7.5 million tons of new overseas capacity will be added, mainly concentrated in India, resulting in significant pressure on the alumina supply side.

In December, my country exported 205,900 tons of alumina, up 22.56% month-on-month and 9.35% year-on-year, while importing 227,800 tons, down 1.98% month-on-month but up 1389% year-on-year. Net imports in December were 21,900 tons. In terms of alumina import and export destinations, the Middle East accounts for a relatively small proportion.

Regarding inventory, as of March 5th, my country's total alumina inventory reached 5.722 million tons, continuing to increase. The increase mainly came from in-transit inventory and port inventory, while futures inventory rose above 330,000 tons.

III. Summary

Overall, the situation in the Middle East has not yet had a significant impact on global bauxite supply. However, from a freight perspective, the continued rise in ocean freight has increased bauxite transportation costs, thus supporting domestic imported ore prices. Regarding alumina, given that the Middle East is a net importer of alumina, the disruption in transportation has led to increased supply from non-Middle Eastern regions. However, with rising energy and raw material caustic soda prices, cost support for alumina has also strengthened. As for electrolytic aluminum, the Middle East is a net exporter of electrolytic aluminum, and the geopolitical situation has a significant impact on local electrolytic aluminum enterprises. From a global supply perspective, this has already had a substantial impact on electrolytic aluminum supply, with a more pronounced effect.

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