Guinea, the world's largest bauxite exporter, announced new controls on bauxite exports effective June 2026, adding upstream supply risk to the aluminum market. The policy is designed to encourage domestic alumina refining capacity, mirroring Indonesia's nickel strategy, but creates immediate cost pressure for Chinese and European refineries dependent on Guinean ore.
Bauxite restrictions come when alumina prices are already elevated due to high natural gas costs in Europe and operational issues at key refineries. The LME aluminum curve has moved further into backwardation, with cash contracts at a $60 premium to 3-month futures. Chinese alumina imports from Guinea account for over 50% of global seaborne bauxite trade.
Combined effects: China's 45Mt capacity cap constrains supply, European smelters remain uneconomic at current power prices, and now upstream raw material costs are rising. Global aluminum supply growth will likely be below 0.5% in 2026, while demand from construction, automotive, and renewables continues at 2-3% annually. The structural deficit is widening.