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Operational challenges and political uncertainty limit immediate impacts of Venezuela’s aluminium industry on Brazil and US markets, despite the country’s production potential, sources told Fastmarkets.
Market participants noted that effects on both markets are likely to be indirect and concentrated over the longer term.
Despite an installed capacity of roughly 460,000 tonnes per year, Venezuela’s aluminium industry is currently running at a much smaller scale of about 8,000 tonnes per month — equivalent to just 96,000 tonnes annually, according to market participants.
Sources mentioned technical constraints and deteriorating industrial infrastructure as factors behind the gap between Venezuela’s aluminium production potential and its current operating levels.
“What was happening is that they were producing around 8,000 tonnes per month and roughly 50% [was considered] off-grade. The other 50% was 99.7% [purity] with very good quality,” a Brazilian trader told Fastmarkets on Friday January 9.
“The [Venalum] plant has installed capacity of 460 thousand tonnes, which is the size of some [Brazilian] plants,” the trader added.
The high volume of off-specification metal is directly linked to operational problems and the use of inadequate inputs in the production process, according to the trader.
“[The amount of off-grade material is] because they don’t use conventional anodes and cathodes; they use green coke with cathodes, which is wet, and when there is very high electrical discharge it creates cracks. When it hits the iron rod with energy, which commonly happens, it melts some of the iron from the rod and if there is somewhere for it to migrate, it migrates to the pipe — among other things they are doing wrong,” the trader said.
Market sources noted that restoring the quality of aluminium output in Venezuela will take time and demand substantial investment.
“I think there could even be a deterioration in the profile of the metal being delivered. As the established order has broken down, there is usually confusion regarding these companies that remain under government control. So for them to recover and start delivering more metal, and higher-quality metal, investment will be required,” a Brazilian aluminium extruder source said.
“The material is being delivered off-grade because it is still effectively eating away at the potlines. So the level of capex [capital expenditure] required to get this running properly would be huge. It’s not that simple to take a smelter out of nowhere and start delivering P1020 overnight,” the aluminium extruder source added.
This production profile limited the commercial destinations of Venezuelan aluminium, particularly in the case of off-specification material, which found buyers mainly among those with lower technical requirements.
Foreign trade data show that between January and November 2025 Venezuela exported around 54,600 tonnes of unwrought aluminium, with Brazil as the main destination, accounting for approximately 37,000 tonnes during the period.
According to market sources, part of these volumes included metal within the P1020 specification, while off-grade material was directed to applications with lower purity requirements, such as the manufacture of household utensils, including cookware.
Fastmarkets assessed the fortnightly aluminium P1020A premium, low-VAT market, delivered São Paulo region at $220-250 per tonne on Tuesday January 6, stable since November 11.
The corresponding aluminium P1020A premium, high-VAT market, delivered São Paulo region was assessed at $105-130 per tonne on Tuesday, stable since December 9.
According to market sources, Venezuelan off-grade aluminium ingot is offered in Brazil for around $180.
Volumes imported by Brazil from Venezuela are not large, sources said, meaning that any interruption to this trade flow would tend to have a limited impact on the local market.
“Frankly, I think it’s difficult to have any clear idea of immediate impact. The volume traded here [Brazil] exists, but it’s nothing hugely substantial. It could generate some impact, but the local market has plenty of metal to make up for it,” a second Brazilian trader source said.
A source in Europe said that, should aluminium exports from Venezuela to Brazil decline, Brazil could redirect more material to its domestic market, which in turn could reduce Brazilian exports to Europe.
Another market source also highlighted that potential effects on Brazil depend on the time horizon considered.
“There are two possibilities. In the short term, it will be bad, because everyone is insecure, there is indecision, no one knows who will govern the country or what will happen,” a third Brazilian trader said. “But in the long term, I think it is an opportunity, because whether you like it or not, once the country enters a more stable situation, it becomes possible to make contact and start buying material again. So in the long term I think it’s positive, but in the short term I think it’s complicated,” the third trader source added.
A Brazilian source said that US interest in Venezuela’s industrial assets is driven less by short‑term metal supply and more by a strategic rationale focused on controlling production capacity and ensuring long‑term supply security.
“With the changes that are happening [in Venezuela], I see the US as a country that needs aluminium. If they are going to take control of oil, which is what the US are saying, they will also take control of aluminium production,” the first trader source said.
“If the Americans were to reactivate this plant [in Venezuela], I think it would be difficult for material to continue being sent to Brazil. I think it would all go to the US, and at a very low cost for them,” the source added.
A market participant stressed, however, that any US moves regarding Venezuela would not imply automatic changes to the commercial rules applied to imported aluminium.
“The point is that the United States put tariff barriers in place precisely to protect local industries, and also to increase revenue,” a Brazilian aluminium extruder source said.
The source added that this framework limits the possibility of differentiated treatment for Venezuelan metal, even under a scenario of political change in the country.
“So it wouldn’t make any sense [for the US] to bring in metal in a differentiated way from any country. Because the United States, for example, has a very good relationship with Argentina and still isn’t bringing in Argentine metal in a differentiated way,” the extruder source added.
According to the source, in this context Venezuela would simply be another potential competitor in the US market, without access to special conditions.
“So I don’t see any impact in that sense for [the US] to receive metal in a different way. [The Venezuelan aluminium producer] will just be another competitor. It doesn’t make sense to open an exception for Venezuela,” the extruder source said.
The US imported only 50.88 tonnes of aluminium products from Venezuela for the period from July 2024 through October 2025, according to the latest data from the International Trade Administration’s US Aluminum Import Monitor.
Still, US Commerce Secretary Howard W. Lutnick recently described Venezuela as “one of the largest mineral and mining regions in the hemisphere,” with vast resources of bauxite – the primary ore for aluminium – as well as nickel and gold.
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