Chinese aluminum smelters have been operating at peak capacity, leading to record output. Daily production in the world's largest producer hit an all-time high of 129,000 tons, driven by strong margins and a global metal shortage. This surge has pushed national output beyond Beijing's 45-million-metric-ton capacity cap for several months, with effective capacity estimated at approximately 45.26 million tons and smelters operating at 99.7% utilization in August.
Despite the domestic production boom, the mandated capacity ceiling remains in place. As a result, Chinese aluminum producers are increasingly investing in smelter projects abroad. This includes significant investments in countries like Indonesia, where about 2.1 million tons per year of capacity is under construction, much of which is intended for the Chinese market. Projects are also advancing in Kazakhstan, Angola, and Saudi Arabia, with Angola's Huatong Angola Industry, for example, building a second 120,000 tons per year smelting project expected to be operational in late 2026.
This overseas expansion is strengthening China's already dominant position in the global aluminum supply chain, as the country accounts for roughly 60% of worldwide production. While some analysts suggest that operational and efficiency gains in existing domestic potlines could add over 200,000 tons this year without formal capacity expansion, the long-term trend points to international growth. Experts like Zaid Aljanabi from CRU Group predict that this expansion, combined with other factors, could lead to a softening of aluminum prices in 2027.
The push for overseas investment comes as China also focuses on other domestic priorities, such as building data centers, which could potentially lead to the retirement of less efficient aluminum plants. However, for now, the global market is contending with China's record output and its strategic moves to consolidate its influence in the global aluminum sector through international ventures.
