Western aluminum production is in freefall. The International Aluminium Institute's latest data reveals an annualized drop of approximately 2.4 million tonnes in output from smelters outside China. Mozal in Mozambique is facing potential closure, Grundartangi in Iceland has halved capacity, and European smelters continue to operate well below historical utilization rates.
The root cause is structural: European energy prices, which surged after the Russia-Ukraine conflict and spiked further during the Iran conflict, have made power-intensive aluminum smelting uneconomical across much of the continent. Unlike China, which benefits from coal-fired power and government support, Western smelters face market-driven electricity pricing that has consistently exceeded break-even levels.
The production collapse is reshaping global trade flows. China's aluminum exports have surged to fill the gap, but Beijing's 45 million tonne capacity cap and potential export restrictions create uncertainty. The IAI data shows that Western smelters are unlikely to restart idled capacity even if prices remain elevated, as power contracts and long-term viability concerns discourage reinvestment.