An unusual surge in China's exports of aluminium stranded wire looks set to unwind, industry sources say, as falling global aluminium prices erode the profitability of a trade that flourished during the supply shock triggered by the Iran war.
Aluminium buyers across Asia and other emerging markets have been importing stranded wire from China to remelt into ingots or process into rods and alloys, while traders and Chinese producers have capitalised on a tax advantage and fears of supply shortages after the Iran war disrupted shipping through the Strait of Hormuz and damaged aluminium facilities in the Gulf, which accounts for about 9% of global supply.
While China's exports of unwrought aluminium and products have increased, shipments of stranded wire have risen much more sharply. China imposes a 30% export tax on primary aluminium but allows stranded wire exports to leave tax-free and qualify for a 13% value-added tax rebate.
China exported 93,179 metric tons of aluminium stranded wire in the first five months of the year, with more than half shipped in May alone. That nearly matched the 94,369 tons exported in the first 11 months of 2025.
However, hopes of a U.S.-Iran peace deal and a reopening of the Strait of Hormuz have pushed global aluminium prices lower, undermining the trade. Exporters now need to charge premiums to remain profitable after buyers spent months securing supplies at discounts, according to three sources familiar with or involved in the market.
Cargoes of stranded wire that were offered at discounts to the London Metal Exchange (LME) benchmark from April to early June are now being offered at premiums of up to $150 a ton, one source said. After accounting for remelting costs, those premiums make the material uncompetitive against some primary aluminium ingots from Russia and Southeast Asia, the source added.
A second source said a buyer withdrew from a deal agreed the previous day after LME aluminium prices fell sharply the next day. Both sources declined to be identified because they were not authorised to speak to the media.
LME three-month aluminium LME:AH1! fell nearly 16% in June as the prospect of a U.S.-Iran peace deal eased concerns about Gulf supply disruptions. The most-traded Shanghai aluminium contract COMEX:ALI1! lost just over 7%, reducing some of the financial incentive to export.
Some cargoes already booked are still expected to be shipped through August, the three sources said, but export volumes are likely to have peaked in June.