Middle Eastern conflicts reshape the metal trade landscape, creating a historic window for China’s aluminum and copper exports.

The conflict in the Middle East has disrupted global metal supply chains, creating the most favorable external environment in years for Chinese aluminum and copper exporters.

As tensions between the US, Israel, and Iran blocked the Strait of Hormuz and severely impacted aluminum smelting capacity in the Persian Gulf, London aluminum prices hit a four-year high last month, and the price gap between Shanghai and London widened to its highest level since 2022.

(Shanghai/London aluminum price ratio reaches April 2022 level)

The China Nonferrous Metals Industry Association predicts that China's aluminum product exports could reach a record high this year. At the same time, exports of copper wire, solar cells, and lithium-ion batteries are also surging, with strong growth recorded in March data.

For Chinese metal producers, this geopolitical shock is translating into tangible order dividends. The burst of overseas demand is not only filling the gap left by weak domestic consumption but is also elevating China's dominant position in the clean energy supply chain to new heights.

Persian Gulf smelting capacity damaged, aluminum price gap hits a four-year high

The Middle East conflict that broke out at the end of February this year quickly spread to the commodities market.

After the actual closure of the Strait of Hormuz, the blow to aluminum smelters in the Persian Gulf was particularly direct. This region accounts for about 9% of global aluminum supply; facility damage has led to a sharp drop in output, and London Metal Exchange aluminum prices climbed last month to a four-year peak.

The price gap between London and Shanghai widened dramatically. Mo Xinda, Director of the Light Metals Department at the China Nonferrous Metals Industry Association, said at an industry conference last month that overseas premiums have risen to "unbelievably" high levels.

It is worth noting that, as China maintains aluminum export tariffs to safeguard domestic supply, a large amount of primary aluminum cannot flow directly to the international market, and this policy constraint actually amplifies the impact of the Persian Gulf supply disruption on international prices.

According to six traders interviewed by Bloomberg, since late March, Chinese aluminum processors have seen a marked increase in overseas orders, with urgent demand for aluminum products used in power grids and automobiles.

Reports indicate that orders at some hot rolling mills are fully booked until June, led by aluminum for electric vehicles, battery cell materials, energy storage cooling plates, and data center heat dissipation materials.

Duty-free export categories also show signs of volume growth. For example, institutions estimate that aluminum-stranded wires exported from April to May may double compared to last year, reaching 40,000 to 50,000 tons, mainly headed to Belt and Road countries.

Copper and clean energy product exports surge together

The copper sector has seen a similar trend.

According to Chinese customs data, copper wire exports in March soared 36% year-on-year. Other products related to the clean energy transition performed strongly as well: solar cell exports jumped 80% in March, lithium-ion battery exports rose 34%, and the increase in electric vehicle exports reached 53%.

Xinyi Shen, Senior Advisor at the Center for Research on Energy and Air (CREA), noted that China's export advantage in the clean energy sector is no accident:

Chinese manufacturers are already ahead in cost, scale, and supply chain integration. When global demand accelerates suddenly, they are best positioned to respond quickly.

High oil prices are an important driving force behind these trends.

Consulting firm Wood Mackenzie pointed out last month that higher fossil fuel prices "help maintain strong electric vehicle export momentum and will support copper demand in the coming months."

Xinyi Shen said that rising fossil fuel prices are stimulating demand for solar and energy storage products, and markets with tight power supply such as Southeast Asia and Africa are accelerating adoption of "solar + storage" solutions to replace diesel power generation. China's export data directly reflects this trend.

However, adjustments to export tax rebates remain a potential constraint. Solar cells and lithium-ion batteries have previously been affected by rebate cancellation policies, and whether export growth can be sustained will partly depend on future policy directions.

China's April trade data is expected to be released this Saturday, and export numbers for key categories like aluminum, copper, and electric vehicles will provide more clues.

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