Q1 2025 was a period of change for the global aluminium industry as it was transformed by geopolitics, greenfield investments driven by sustainability, and shifting market fundamentals. From trade wars to low-carbon production mandates, the industry had to adapt to many shifts around.
Read on ahead for a complete rundown of FY 2026 Q1’s key trends and an early look at FY 2026 Q2.
Geopolitical tensions change supply chains
The aluminium sector was reeling in the face of increasing trade tensions and sanctions. The United States government’s decree to levy a 25% tariff on Canadian and Mexican aluminium imports sent shock waves through North American supply chains with concern over diversion of exports to Asia and Europe. Then on “Liberation Day’, the US President unveiled massive reciprocal tariffs on the rest of the world’s countries that would upend global trade, including 145% on the world’s biggest producer, China.
International retaliation was swift: China hit back with levies of up to 125% on key US commodities like coal and LNG. Other major producers – such as Chinese aluminium giants – signalled they would expand overseas capacity, diverting shipments to non-US markets undeterred by levies. This rebalanced global supply chains, causing European premiums to fall by over 35% since early 2025 as metal was redirected away from the US.
While US aluminium smelters briefly benefited from higher local prices, chronic underinvestment and long lead times meant domestic primary aluminium production remained stagnant despite protective duties. The blanket reimposition of 25% aluminium tariffs in 2025 underscores ongoing policy uncertainty, deterring long-term investment and leaving the sector vulnerable to future shifts in US trade agendas.
At the same time, the European Union opted to include Russian aluminium imports in a list of sanctions in its 16th sanctions package to limit reliance on a nation that used to provide 19% of the bloc’s premium aluminium. The measures triggered supply chain risks, with Rotterdam duty-paid premium for aluminium falling to $320–330/tonne as Canadian traders diversified away from it.
In China, there were increasing regulatory pressures with domestic production near the government-set 45-million-tonne limit, which limited export capacity. Withdrawal of China’s 13% export tax rebate in late 2024 also made pricing strategy more challenging, though infrastructure and green energy sector stimulus policy underpinned domestic demand.
Capacity expansion and innovation through investments
There were large injections of capital into aluminium manufacturing and recycling facilities in Q1:
Ghana’s bauxite dreams: Ghana’s $10 million Takoradi-Nyinahin railway development was accelerated, opening up the bauxite mining opportunity. Ashanti Bauxite Limited moved ahead with plans for an integrated mine-refinery plant in the Ashanti region to open up the nation’s 900-million-tonne reserves.
US recycling boom: Hydro bought a $85 million Kentucky casting line (Note: Link refers to related $17.4M tax credit for the Henderson facility enhancement), and Novelis had intended to construct a $4.1 billion zero-waste refinery in Alabama, signaling North America’s emphasis on sustainable manufacturing.
Indonesia’s Refinery Achievement: President Joko Widodo opened a $941 million alumina refinery in West Kalimantan, ratifying Indonesia’s move away from raw mineral export to added-value processing.
Sustainability takes centre stage
Decarbonisation activities have been placed high on agendas for action in the aluminium industry:
Low-carbon innovations: Capral Aluminium’s LocAl low-carbon aluminium caught on, being used by Australian lighting company Versalux to cut commercial building emissions.
Circular economy push: China extended its carbon trading initiative to aluminium, steel, and cement, inducing greener practices. World scrap-based aluminium capacity, in the meantime, will rise by 22 million tonnes in five years, with China’s 15-million-tonne boost leading the pack.
Market dynamics: Volatility enters resilience
Alumina prices wavered erratically, to a record USD 800 per tonne late in 2024, only to fall to USD500 per tonne early in 2025 as a result of Australian refinery re-openings and Indonesian new capacities. Otherwise, aluminium prices remained firm, and analysts forecast a 6.3% increase to USD 2,575 per tonne year ahead on the back of supply shortages and China’s discipline in production.
Japanese Q2 2025 premiums dropped 20% from $200 to $182/tonne due to market concerns of oversupply pushing the market. Chinese bauxite volumes were imported in record quantities on the back of Guinean supplies.
Q2 2025 Outlook: Walking the Tightrope between opportunity and risk
The second quarter of the current financial year is likely to be pushed to the limits of industry resilience:
1. Shortfalls in supply: Mainland China’s biggest aluminium production will level off at 45 million tonnes, reducing supply worldwide. Shortages would be substituted to some extent by Vedanta’s 435kt Indian Balco expansion and Indonesian project Huatsing, though at increased energy cost.
2. Trade war fallout: US tariffs will redirect 1.86 million tonnes of Canadian aluminium to Europe, exerting strain on regional premiums. This is in sharp contrast to the EU’s Russian import ban which can even trigger supply deficit to fuel the shortage.
3. Demand Drivers: EV manufacturing—expected to require 10 million tonnes of aluminium in China by 2030—and renewable projects will be demanding, offsetting weakness in building.
4. Price Trend: Despite alumina surpluses to weaken prices, Bank of America predicts aluminium prices averaging USD 2,813 per tonne in 2025, with Asian demand and supply-chain disruption leading the way.
Q1 2025 highlighted the aluminium industry’s dual challenge: enduring geopolitics headwinds and leading the green transition. Until Q2, future-oriented investment in recycling, domestic diversification, and cooperation-based innovation will be decisive. Even as sustainability becomes a necessity rather than a choice, the industry’s capacity to adapt to growth and decarbonisation will determine its course of action in a growingly uncertain world.