Chinese aluminium producers are planning a major expansion overseas, with at least 15 million tonnes per annum (MTPA) of new primary smelting capacity announced or planned across Southeast Asia, the Middle East, Central Asia and Africa. The expansion could push the global aluminium market into surplus, although tighter scrutiny from Beijing and concerns over project profitability may limit how much capacity is built.
Around 2.85 MTPA of the planned capacity is already under construction or being brought into operation. This represents 3.8 per cent of the current global annual smelting capacity of 73.78 million tonnes.
The new projects, combined with recovering aluminium output in the Middle East, are expected to change the global supply balance. Morgan Stanley forecast in July that the market would move from a deficit of 1.1 million tonnes in 2026 to a surplus of 830,000 tonnes in 2027 and 1.8 million tonnes in 2028.
China’s domestic aluminium smelting capacity is capped at 45 MTPA under a policy introduced in 2017 to curb overcapacity and pollution. With limited room to expand at home, producers are increasingly looking overseas for growth.
China’s aluminium output has continued to rise despite the cap. The country produced 22.34 million tonnes in the first half of 2026, up 2.24 per cent year-on-year. High domestic capacity utilisation and relatively low alumina prices have also supported smelter operations.
However, the overseas expansion may face economic and regulatory hurdles. Additional supply could put pressure on aluminium prices, making some projects less profitable. Beijing has also tightened its scrutiny of overseas investments by Chinese companies.
Morgan Stanley has lowered its average aluminium price forecasts to USD 2,850 per tonne for 2027 and USD 2,800 per tonne for 2028. It expects prices to average USD 3,150 per tonne in the second half of 2026.
“Ultimately, it comes down to economics. Most of these companies are privately owned and profit-driven,” said Rachel Zhang, Head of China Materials Research at Morgan Stanley, adding that companies would be unlikely to invest in projects that could not make money.