en.Wedoany.com Reported - The recent surge in China's aluminum wire exports may be about to subside, as falling global aluminum prices erode profit margins in this business. Over the past period, supply disruptions caused by the Iran conflict had generated lucrative returns for this trade.
Aluminum buyers from Asia and other emerging economies purchase aluminum wire from China, then remelt it into aluminum ingots or process it into wire rods and alloys. Meanwhile, traders and Chinese producers have capitalized on tax incentives and market concerns over supply shortages—the Iran conflict disrupted shipping through the Strait of Hormuz and damaged production capacity at aluminum smelters in the Persian Gulf region, which accounts for about 9% of global aluminum supply.
While China's overall exports of unwrought aluminum and aluminum products have increased, the growth in aluminum wire shipments has been even more pronounced. China imposes a 30% tariff on exports of primary aluminum but allows aluminum wire to be exported duty-free and provides a 13% VAT rebate. In the first five months of this year, China exported a total of 93,179 metric tons of aluminum wire, with more than half shipped in May. This figure nearly matches the total export volume of 94,369 metric tons for the first 11 months of 2025.
However, the increased likelihood of a peace agreement between the United States and Iran, along with the resumption of shipping through the Strait of Hormuz, has driven down global aluminum prices, significantly reducing the profitability of this trade.
According to three sources familiar with or involved in the market, exporters now must set premiums to maintain profitability, whereas for months buyers had been able to purchase at discounts. One source said that from April to early June, a batch of wire sold at a discount to the London Metal Exchange (LME) quote now commands a premium of $150 per metric ton. The source added that, considering remelting costs, this premium makes the material less competitive compared to some primary aluminum ingots from Russia and Southeast Asia.
Another source said that a buyer abandoned a previously agreed deal after LME aluminum prices plunged the following day. Both sources requested anonymity as they were not authorized to speak to the media.
LME three-month aluminum prices fell nearly 16% in June, as the prospect of a U.S.-Iran peace deal eased concerns over supply disruptions from Persian Gulf countries. Meanwhile, the most actively traded aluminum contract on the Shanghai Futures Exchange fell slightly more than 7%, further weakening the financial appeal of exports.
According to the three sources, contracted metal batches are expected to continue shipping in August, but the peak in export volumes may have already occurred in June.
