1.1 Production Situation of Electrolytic Aluminum Outside China
New Capacity Commissioning: The second phase of Huaqing Aluminum Industry with an annual capacity of 250,000 tons was completed and put into operation in 2024. Its commissioning was suspended in November last year due to cost issues. However, with the rise in aluminum prices and the decline in alumina prices, it was fully commissioned in the first quarter of 2025, achieving full-load operation of approximately 480,000 tons per year.
Production Resumption: In Europe, although some aluminum plants are resuming production, the overall progress remains slow due to large fluctuations in energy prices, meager profits, and weak demand. After Trump imposed comprehensive tariffs, the spot premium of aluminum in the Midwestern United States surged. However, sluggish demand and power supply issues still hindered the production resumption of local enterprises.
Relevant projects include:
(1) Alcoa has formulated future plans for its aluminum complex in San Ciprián, Spain. The company established a joint venture (JV) with Ignis Equity Holdings to support the operation of the smelter. Alcoa will hold a 75% stake in the JV and continue to act as the operator, while Ignis will hold 25%. Alcoa stated that the JV will promote the restart of the San Ciprián smelter as planned in 2025. The aluminum complex includes an alumina plant and an electrolytic aluminum plant, with the electrolytic aluminum plant having a designed annual capacity of 228,000 tons and 4 electrolytic series (512 electrolytic cells in total). Affected by the 2021 energy crisis, the smelter was fully shut down in 2022. According to the restart plan, the capacity will be restored to 75% of the nominal capacity (approximately 171,000 tons/year) by the end of 2026.
(2) Rio Tinto's New Zealand Aluminium Smelter (NZAS) announced that the Tiwai Point electrolytic aluminum plant, originally scheduled to be fully resumed in April 2025, will be delayed until the end of August to achieve full-load operation. NZAS reduced the power demand of the electrolytic aluminum plant during the energy shortage last winter to support the national energy supply. With the rise of reservoir water levels and the gradual recovery of energy supply, NZAS gradually resumed production. However, due to the continued tight energy supply, NZAS had to suspend its production increase plan.
(3) The production resumption of three electrolytic aluminum plants under Germany's Trimet is advancing steadily. Among them, the Essen plant (capacity of 165,000 tons) and the Hamburg plant (capacity of 135,000 tons) are basically operating at full capacity, while the Voerde plant (capacity of 95,000 tons) is planned to achieve full-load production in the fourth quarter of 2025. These three plants were forced to cut 70% of their capacity due to high energy costs in 2022, with a total affected capacity of 276,000 tons. Since the announcement of production resumption in April 2024, the progress has been relatively smooth.
Source: IAI
Figure 1-1 Daily Output of Electrolytic Aluminum Abroad
Overall, due to the commissioning of the second phase of Indonesia's Huaqing Aluminum Industry, overseas supply capacity improved to some extent in the first half of the year. According to statistics from the International Aluminium Institute (IAI), the cumulative global primary aluminum output (excluding China) from January to May 2025 was 12.18 million tons, a year-on-year increase of 0.4%, with a daily output of 80,800 tons. Antaike predicts that the overseas electrolytic aluminum output in the first half of 2025 will reach 14.75 million tons, a year-on-year increase of 1.0%.
1.2 Production Situation of Electrolytic Aluminum in China
In the first half of 2025, China's aluminum industry maintained stable production overall, with no large-scale production cuts caused by force majeure factors. Moreover, with the resumption of production by electrolytic aluminum enterprises in Sichuan, Guizhou, Qinghai and other provinces/regions, as well as the commissioning of new projects, production capacity continued to increase in the first half of the year. According to Antaike's statistics, as of the end of June 2025, China's completed electrolytic aluminum capacity was 44.7 million tons/year, of which the operating capacity was 44.05 million tons/year, an increase of 490,000 tons compared with the end of 2024. The capacity utilization rate from January to June reached 98.1%, constantly hitting a new historical high, 2.4 percentage points higher than the same period last year; among them, the capacity utilization rate in June was 98.5%, 0.9 percentage points higher than the end of 2024. China's electrolytic aluminum output in the first half of 2025 was approximately 21.84 million tons, a year-on-year increase of 2.4%.
Source: Antaike
Figure 1-2 Changes in China's Electrolytic Aluminum Capacity in the First Half of 2025
In terms of time:In the first quarter, the reduced capacity was 40,000 tons/year, the newly commissioned capacity was 60,000 tons/year, and the resumed capacity was 305,000 tons/year, with a total capacity increase of 325,000 tons/year. The reduced capacity was in Guangxi, mainly due to production cuts and technical transformation caused by excessively high costs in the fourth quarter of last year. The new project was the "600kA electrolytic cell capacity replacement and upgrading project" of Chalco Qinghai Branch, which was completed and commissioned at the end of last year and is currently in the capacity climbing stage. The resumed capacity was mainly concentrated in Sichuan and Guizhou, most of which were capacities suspended due to losses in the fourth quarter of last year. Since 2025, with the decline in costs and the return of profits, the suspended capacities have started to restart.In the second quarter, the newly commissioned capacity was 74,000 tons/year, and the resumed capacity was 95,000 tons/year, with a total capacity increase of 169,000 tons/year. In terms of new commissioning, in addition to the continuous output increase of Chalco Qinghai, the third phase 34,000 tons/year replacement project of Heqing Yixin Aluminum Industry was put into operation with power. The project "embedded" 25 sets of 500kA electrolytic cells into the existing factory buildings, with 12 sets in the first-phase factory building and 13 sets in the second-phase factory building. So far, the total capacity of Heqing Yixin Aluminum Industry has reached 450,000 tons/year. Production resumption was still concentrated in the southwest region, but after the large-scale concentrated resumption in the first quarter, the recoverable scale in the second quarter was relatively limited.Overall, production capacity increased rapidly in the first quarter and maintained stable growth on this basis in the second quarter.
Table 1-1 Changes in Operating Capacity of China's Electrolytic Aluminum in the First Half of 2025
(10,000 tons/year)
Source: Antaike
1.3 Cost Situation of China's Electrolytic Aluminum
Since 2025, with the decline in alumina and electricity prices, the cost of China's electrolytic aluminum has dropped significantly. According to Antaike's calculation, from January to June 2025, the tax-included weighted average total cost of China's electrolytic aluminum was 17,185 yuan/ton, a slight year-on-year increase of 1.0%; among them, the cost in June was 16,390 yuan/ton, basically the same as the previous month; it decreased by 1,093 yuan/ton compared with the same period last year, a decrease of 6.3%, and by 4,256 yuan/ton compared with the end of 2024. Benefiting from the relatively high aluminum prices in the same period, the industry's profit situation was good. The average profit margin in the first half of 2025 was 3,130 yuan/ton (due to different regional tax rates, value-added tax and income tax are not deducted; the same below), a year-on-year increase of 310 yuan/ton or 11.0%; among them, the average profit in June was 4,054 yuan/ton, an increase of 351 yuan/ton from the previous month.
Table 1-2 Cost and Profit Situation of China's Electrolytic Aluminum in the First Half of 2025
(Yuan/ton)
Source: Antaike
Analysis of main cost components shows that the three major cost items of electrolytic aluminum, including alumina, electricity and anode, accounted for 40.1%, 32.2% and 13.5% of the total cost in the first half of the year, respectively; compared with the end of 2024, the three major cost items changed by -3,599 yuan/ton, -352 yuan/ton and +488 yuan/ton, respectively. The significant drop in alumina prices led to a 10.7 percentage point decrease in the proportion of alumina costs in electrolytic aluminum production compared with the end of 2024, which was the main reason for the decline in electrolytic aluminum costs in the first half of 2025.
Source: Antaike
Figure 1-3 Composition of Total Cost of China's Electrolytic Aluminum in the First Half of 2025
Electricity cost decreased: As of the end of June, the proportion of self-owned power in China's operating electrolytic aluminum capacity was about 55%; the proportion of grid power was about 45%. The continuous decline in coal prices led to lower self-owned electricity prices for aluminum enterprises, which was the main reason for the decrease in electricity costs in the electrolytic aluminum industry since 2025. Since 2025, the pace of production resumption in coal mines in major coal-producing areas has accelerated, and the arrival volume of imported coal has remained high; however, thermal coal demand was weak due to the warm winter, and non-electric industries were in the off-season. The loose coal supply but weak demand led to a downward trend in coal prices, and the self-owned electricity prices of aluminum plants gradually fell. In addition, grid electricity prices in Guangxi, Yunnan, Sichuan and other regions have decreased to varying degrees, further promoting the reduction of electricity costs for aluminum enterprises. According to Antaike's statistics, the weighted average price of self-owned electricity in June 2025 was 0.332 yuan/kWh, a decrease of 0.048 yuan/kWh compared with the end of 2024 and 0.065 yuan/kWh compared with the same period of 2024; the grid electricity price was 0.428 yuan/kWh, a decrease of 0.074 yuan/kWh compared with the end of 2024 and 0.0276 yuan/kWh compared with the same period of 2024; the comprehensive weighted average electricity price was 0.379 yuan/kWh, a decrease of 0.0507 yuan/kWh compared with the end of 2024. The comprehensive weighted average electricity price from January to June was 0.414 yuan/kWh, a year-on-year decrease of 0.034 yuan/kWh.
Source: Antaike
Figure 1-4 Electricity Price Trend of China's Electrolytic Aluminum Industry
Alumina cost dropped significantly: Since the end of last year, the tight supply of bauxite has eased, new alumina capacity has been gradually released, and the previous pattern of insufficient supply has tended to reverse. At the same time, large-scale new projects expected to be launched within the year are imminent. Both in reality and expectation, alumina supply is shifting to absolute surplus. Against this background, alumina prices ended the three-month violent rise and fell off a cliff. The main futures contract hit a low of 2,663 yuan/ton, the lowest since the listing of alumina futures, a decrease of 52% compared with the highest point of 5,540 yuan/ton since the listing in early December 2024; the average spot price also dropped from 5,757 yuan/ton in mid-December last year to a low of 2,886 yuan/ton at the end of April 2025. According to Antaike's alumina spot quotation, the average spot price of alumina from January to June 2025 was 3,460 yuan/ton, a year-on-year decrease of 1.3%.
Anode cost fluctuated downward: Affected by the rising prices of raw materials for anode production, the price of domestic pre-baked anodes shifted upward in 2025. According to Antaike's calculation based on anode spot quotations, the average price from January to June 2025 was 4,926 yuan/ton, a year-on-year increase of 799 yuan/ton or 19.1%.