HSBC-Mainland China June 2025 materials trade Aluminium exports hit 18-month low-20250714

Steel exports remained strong in June, up 11% y-o-y to 9.7mt, amidst theongoing weakness in domestic demand and despite US tariff measures:Chinese steel players continue to rely on exports as they did in 2023-24, backed bycompetitive China prices. Exports y-t-d are up c9% y-o-y. As Chinese steel exportsare largely directed towards non-US regions, we see limited impact from US tariffs,increased to 50% last month from 25%. A recently announced anti-involutioncampaign to combat overcapacity issues for multiple industries, including steel, hasimproved market sentiment, triggering some price gains in July vs a sluggish Q22025. That said, no decisive supply cuts have been announced yet. Without deepergovernment-led production cuts, the industry will likely remain oversupplied.

Aluminium (unwrought + products) exports in June fell 20% y-o-y and 11% m-o-mto 489kt: Aggregate exports y-t-d are down 7.3% y-o-y. The steep y-o-y decline in Juneis attributable to a higher base and sufficient stocks in overseas markets for Q3 2025(SMM, 14 July). We expect aluminium exports to stay soft given US tariff measures,withdrawal of the 13% export tax rebate by China since December, capacity caps, androbust domestic demand in China. US-China trade talks helped aluminium prices tostabilize, with LME rising to USD2,600/t recently (+4% m-o-m). We expect prices toremain volatile as uncertainty continues. We believe China’s capacity ceiling andstimulus measures are key support to aluminium prices.