Aluminium Takes on Greater Strategic Importance in China

in Commodity News 06/08/2026

Aluminium is becoming increasingly important to China’s economic and industrial strategy as the country steps up investment in AI, data-centre capacity, renewable energy, advanced manufacturing and power infrastructure, Fitch Ratings said.

China’s 15th five-year plan, unveiled in early 2026, elevated “resources security” to a national priority, placing it immediately after food and energy security for the first time amid rising geopolitical risks. The new Mineral Resources Law Implementation Regulations, which took effect in June 2026, require strategic minerals to be incorporated into the national reserve system. The policy underscores the growing importance of a reliable supply of strategically critical industrial materials. Aluminium is among the main beneficiaries because of its combination of conductivity, durability, corrosion resistance and light weight.

Energy transition is one of China’s key strategic priorities and is central to building a more sustainable and self-sufficient energy system. A stable power supply is also becoming more important to support strategic industries such as advanced manufacturing, industrial digitalisation and AI, making aluminium more embedded in the country’s broader industrial planning. Fitch said rising AI-related electricity demand is likely to reinforce investment in power infrastructure and, in turn, aluminium consumption.

More than 40% of China’s aluminium demand is linked to energy-transition and power-infrastructure sectors. Aluminium is widely used in transmission lines, substations, transformers, solar installations, wind-power projects, electric vehicles, battery systems and wider grid infrastructure.

The rapid expansion of AI-related computing capacity is likely to strengthen this trend, as higher data-centre electricity needs require additional investment in generation, transmission and distribution infrastructure.

The strategic importance of aluminium is further reinforced by structural supply constraints. China keeps a 45 million-tonne cap on aluminium smelting capacity, a limit Fitch believes is unlikely to be relaxed because of the industry’s high electricity consumption and China’s decarbonisation objectives. Industry utilisation rates are already close to full capacity, leaving limited spare room to absorb supply disruptions.

Global supply flexibility is also constrained. Aluminium smelting requires large amounts of reliable and competitively priced electricity, while environmental requirements and long development timelines limit the ability of new producers to add meaningful capacity quickly. These factors increase the strategic importance of large incumbent producers in China’s supply chain.

This is expanding Aluminum Corporation of China’s, or Chinalco’s, role in supporting the country’s resource-security and energy-transition objectives. Chinalco accounts for about 22% of China’s aluminium smelting capacity, equal to roughly 12% of global capacity. The company also holds leading positions across the value chain, including an estimated 34% share of China’s alumina market and 26% share of aluminium product output.

Chinalco supplies roughly half of the aluminium used in China’s new-energy sectors, making it a key participant in supply chains that support renewable-energy deployment and power-system expansion.

Fitch said the rising strategic importance of aluminium supports its assessment of Chinalco’s role in government policy preservation. Any default or disruption at Chinalco would immediately affect supply chains tied to renewable energy, power infrastructure and other strategic sectors.

Given existing capacity constraints, supply shortfalls would be difficult to offset quickly through alternative domestic production, unlike in many other metals where disruptions can be more easily absorbed by competing producers.

Source: Fitch Ratings tweet