German media: Trump tariffs and China's production cuts - aluminum prices surge

According to the Frankfurter Rundschau, China dominates the trade of one of the most important metals in the world, aluminum. Production cuts may soon lead to price increases, along with tariff pressures.

Not long ago, automotive parts suppliers had warned about supply shortages caused by China's dominant position in rare earths. Now, reduced supply, rising demand, and President Donald Trump's tariffs have led to a global increase in aluminum prices. In the key benchmark market - the London Metal Exchange, aluminum prices have risen by about 17 cents since April's low point. China is once again a crucial link.

Analysts believe the situation could worsen further in the coming months. China's restrictions on production are causing a shortage of aluminum supply, while the production capacity of other regions around the world is limited. According to the Financial Times, Thomas Strobl, a strategist at UniCredit, said: "Due to sustained demand from China's economic stimulus measures and limited capacity, we expect aluminum prices to rise this year." Rising US tariffs and low global inventories may cause bottlenecks.

Analysts at Bank of America predict that aluminum market surplus in 2025 may turn into a shortage in 2026. By the end of 2026, prices may rise to $3,000 per ton, compared to around $2,700 currently.

The key factor is China's huge influence in the aluminum market. Whether in production or consumption, China accounts for nearly 50% of the share. Since 2017, China has set a cap on annual production - according to Bloomberg, 45 million tons per year, citing reasons such as "excess inventory and emission issues."

Official data published in January 2025 showed that China's aluminum production in 2024 set a record of over 43 million tons. As a result, China had to cut production, leading to a reduction in aluminum available for export. However, there was still a huge surplus in 2024, which flowed to Western countries through large-scale exports, causing concerns.

Shanghai Nonferrous Metals Network expects China's aluminum production to grow by about 2.0% in 2025, while the growth in 2024 was 3.9%. A real decline is expected to occur in 2026: the growth rate may be only 0.7%.

Aluminum is the most common metal on Earth. Market research firm Research and Markets points out that it makes up about 8% of the Earth's crust and is the second most widely used metal after steel.

Germany relies on aluminum. In 2023, Germany imported approximately $6.45 billion worth of primary aluminum (about €5.45 billion), making it the second-largest aluminum importer in the world. According to data from the Observatory of Economic Complexity (OEC), the main countries of origin for imports include the Netherlands, the United Arab Emirates, and Norway.

The aluminum issue brings to mind the current debates in the rare earth and critical raw materials markets. In these areas, China also holds a dominant position (even stronger than in aluminum) and implements export restrictions, which have led to supply tensions in Western countries. These restriction measures are a response to U.S. tariffs and other trade barriers.

Aside from China's dominance, the second major issue in the aluminum market is former U.S. President Donald Trump. In February 2025, he announced significant tariff increases on products containing steel and aluminum components. The first batch involves 407 product categories, with an additional 60 under review. For the taxed product categories, a 50% tariff will be imposed based on the proportion of steel and aluminum within them. The products involved include motorcycles, electric bicycles, window and door frames, sports equipment, and lifting vehicles. Because Trump is not imposing taxes on finished products as a whole, but rather on the steel and aluminum components, companies must calculate the specific proportions to determine the actual tariff level.

Currently, machinery manufacturers are already worried about a drop in sales. ZDF television in Germany reported on a case of a harvester: it was originally supposed to be exported to the U.S. for 500,000 euros, but due to Trump's tariffs, the price increased dramatically. "U.S. customers almost overnight had to pay 750,000 euros." ZDF quoted Bernard Korne, a company executive, saying, "This is clearly a large sum, and U.S. customers may reconsider whether to purchase new chippers in the coming years."

Original: www.toutiao.com/article/1843830658442252/

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