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Informist, Wednesday, May 27, 2026

 

By Abhijit Doshi

 

MUMBAI – Global aluminium markets are in a bullish mode, with prices rising to a 4-year high, and not expected to scale back in the near futures, analysts said. In fact, multiple factors are expected to ensure that the high prices remain well-supported.

 

Aluminium prices climbed to a 4-year high on the London Metal Exchange, as tightening supply conditions continued to support the market, ING Economics observed in a note Tuesday. Prices traded near $3,700 per tonne during Tuesday's session, the highest level since March 2022, it said.

 

The three-month old US-Iran war has disrupted the supply chain of the metal, constraining export flows, and reduced the availability of aluminium in most markets, except in China. Until recently, China's aluminium smelters were running at elevated operating rates to capture healthy margins and offset supply losses elsewhere. Its daily aluminium output rose to a record 129,000 tonnes in April. Shipments rose by more than 25% year-on-year to 183 million tonnes in 2025, supporting Chinese refining activity and helping contain production costs, it said.

 

However, there are visible signs now that the market may be starting to turn. Domestic inventories are rising, while policy pressure linked to energy consumption and emissions is intensifying. The local authorities there are stepping up scrutiny of energy use and emissions, raising expectations of potential output curbs in the aluminium sector, the note said.

 

For China, further upside risks stem from potential raw material constraints, after Guinea – China's key bauxite supplier – flagged possible export curbs from June.

 

"Aluminium could find some additional support from reports that Guinea is looking to introduce controls on exports of bauxite," Daniel Hynes, senior commodity strategist at ANZ Research said in a note. "Guinea's exports of the key material in aluminium smelting make up a third of global production".

 

Commerzbank Research said the main reason for the rise of aluminium price is market's concern about production cuts in China as the government seeks to reduce overcapacity in the manufacturing sector. According to analysts at Mysteel Global, some smelters – for example in the province of Guangxi – have already curbed output because inventories are piling up, Commerzbank Research said.

 

"The market is now facing supply risks on multiple fronts. Middle East disruptions are tightening export availability, while China – the world's swing producer – could face production constraints," ING Economics said.

 

"In the near term, aluminium prices are likely to remain well-supported, with ongoing Middle East disruption the primary market driver. Any further escalation risks additional supply losses and tighter export availability, particularly for ex-China consumers. While concerns over potential Chinese output curbs are providing additional support, the market's immediate focus remains firmly on geopolitical risks and their impact on global supply flows," ING Economics said.

 

However, Commerzbank Research noted that the global demand for aluminium seems to be weak, which it found surprising. "This is rather remarkable given that supply disruptions in the Gulf region following the closure of the Strait of Hormuz should actually have opened up a supply gap equivalent to almost 10% of global production. This shortage is reflected in significantly higher regional premiums (for example in Europe and the US), which should make it highly profitable for Chinese producers to export their excess metal."

 

"At least for the duration of the Middle East conflict, we therefore, do not expect more extensive production cutbacks," it said.

 

At 1538 IST, the three-month closing price of aluminium on the London Metal Exchange was up 0.63% at $3,672.50 per tonne. On MCX, the June contract of aluminium was trading 0.1% higher at INR 387 per kg.  End

 

US$1 = INR 95.69

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vandana Hingorani

 

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