Imports surge, premiums fall: Brazil's aluminum industry faces new rivals

Traders also noted that Rusal, Russia's top producer, has entered the market with small trial sales.

A trader said, "I have been hearing a lot of rumours about Rusal's approach. I heard that it had already made some sales and the cargo was about to arrive, and they would do a test [of the material]."

Alumar, one of Brazil's largest smelters, confirmed the shift, "The Brazilian market has attracted the attention of various producers, which increases competition," a spokesperson told Fastmarkets on Monday.

Tariffs reshape trade flows

The 50 per cent tariff on aluminum imports introduced by the US in June 2025 has disrupted global flows. Brazil's exports to the US dropped 25 per cent in the first half of 2025, costing producers around USD 210 million.

Though Brazil's direct exposure to the US was limited, surplus shipments from other suppliers were redirected into new markets. Imports into Brazil climbed 6.6 per cent, reaching 263,210 tonnes in Jan–Jul 2025, compared with 246,832 tonnes a year earlier according to Brazilian government data.

A trader explained, "Brazil didn't export much [aluminum to the US], but other [global producers] did, so there's an excess of material."

Premiums under pressure

The arrival of foreign aluminum has dragged premiums lower. Fastmarkets assessments show:

The surge of international aluminum into Brazil has driven premiums lower across key product categories. In São Paulo, the P1020A high-VAT premium dropped from USD 130–170 per tonne in March 2025 to $110–130 per tonne in August, a fall of 15–23 per cent. 

The low-VAT premium slipped from USD 240–290 per tonne to USD 215–250 per tonne over the same period, down 10–14 per cent. Meanwhile, the 6063 & 6060 extrusion billet premium at Brazilian ports slid to USD 310–340 per tonne in August, its weakest level since September 2024.

The declines highlight intensifying competition as foreign suppliers seek a foothold in Brazil. While lower costs support downstream users, domestic producers face tightening margins.

Traders said more imports could follow if prices fall further, making overseas material competitive for construction, automotive and packaging buyers.

Vedanta and Rusal strategies

Vedanta is pushing international growth. The company is expanding Indian capacity from 2.4 million tonnes to 3 million tonnes by 2026, with investments in refining, bauxite mining and logistics. Its transport network moved more than 55 million tonnes of cargo in FY2025. Brazil has become part of its South American export strategy.

Rusal is scaling back at home but still selling abroad. It is cutting production by about 6% (250,000 tonnes) due to high alumina costs and weak domestic demand, while testing sales in Brazil. The company is also building alumina capacity to reduce cost risks.

Domestic market and production outlook

Brazil's aluminum sector is expected to grow at a CAGR of 4.7 per cent through 2034, supported by demand from urbanisation, infrastructure, auto manufacturing and renewable energy. Large bauxite reserves and rising recycling volumes provide long-term backing.

Imports linked to US tariffs are squeezing local margins. Shipments rose 6.6 per cent in Jan–Jul 2025, cutting premiums by up to 23 per cent. Even so, leading producers remain tied to local demand. Alumar is close to full capacity and expanding output for domestic use.

"CBA has more than 90 per cent of its sales volume directed to the domestic market, which minimizes the consequences of the trade measures adopted by the US," a CBA spokesperson said on Aug 22.

"Albras has not seen a significant change in export flows from Brazil following the implementation of the 50 per cent tariffs by the US. Brazilian producers, including Albras, continue to supply the domestic market," an Albras spokesperson said on Aug 25.

Alumar added, "Alumar's production is directed to the Brazilian domestic market, considered strategic and growing, so our priority remains to consistently and responsibly meet domestic demand."

Brazil produced 1.02 million tonnes of primary aluminum in 2023, helped by Alumar's restart and stable output at Albras and CBA. Output in 2024–25 is expected at 1.0–1.1 million tonnes annually.

Main smelters:

· Albras (Pará) – ~460,000 t/y; operating near full capacity within Hydro's production chain, as of 2024 leverages strong infrastructure and supply relationships to maintain stable output despite rising competition.

· Alumar (Maranhão) – ~447,000 t/y; restarted in 2023 and moving aggressively toward 100 per cent capacity, as of 2024 dedicates all new output to the domestic market as a strategic priority.

· CBA (Minas Gerais) – ~455,000 t/y; steady production profile with more than 90 per cent of sales directed to Brazil, offering resilience against trade disruptions.

· Ouro Preto Smelter – ~150,000 t/y; jointly owned by Hindustan Aluminum (66.67 per cent) and Novelis (33.33 per cent), as of 2024 continues active production to ensure stable market supply.

Industry outlook

US tariffs have altered aluminum trade, sending more metal into Brazil and raising competition. Vedanta is stepping up exports, Rusal is probing the market, and domestic players are holding firm to local demand.

With falling premiums and margin strain, Brazilian producers will rely on efficiency, capacity use and closer ties with customers to defend their position in a shifting global market.