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Informist, Tuesday, Jun. 23, 2026

 

MUMBAI – Geopolitical tensions in West Asia have eased, reducing concerns about further disruptions to aluminium supplies and key shipping routes in the region. However, the market is expected to remain tight, with the global aluminium deficit set to persist, Ewa Manthey, commodities strategist at ING Economics, said in a report.

 

Supply disruption linked to the conflict has already removed an estimated 3 million tonnes of production from the market. "As a result, we continue to forecast a global aluminium deficit of 1.8 million tonnes this year. While the geopolitical backdrop has improved, the supply losses underpinning this outlook remain in place," Manthey said. West Asia accounts for around 9% of global primary aluminium production and is a major supplier to international markets. 

 

The easing of tensions follows the signing of a preliminary memorandum of understanding between the US and Iran and extension of the ceasefire, which have lowered the risk of additional supply losses and disruptions. "However, aluminium supply cannot be restored overnight," Manthey said. Smelters are designed to operate continuously, and restarting idled capacity could take months and require significant investment. "This means that even if geopolitical conditions continue to improve, supply recovery is likely to be gradual. The ceasefire reduces the risk of further disruptions, but it does not immediately restore lost production," Manthey said. 

 

Higher Chinese exports have provided some relief to the tight aluminium market, with export volumes rising 15% year-on-year to 598,000 tonnes in April and a further 16% to 630,000 tonnes in May. However, Manthey noted that stronger shipments from China have not been sufficient to offset the estimated 3 million tonnes of production lost due to the West Asia war. With Chinese aluminium output already running above the government's capacity cap and additional supply growth from Indonesia expected to be limited, the global market is likely to remain dependent on a gradual recovery of disrupted supply elsewhere.

 

Meanwhile, easing of the military conflict in West Asia is expected to reduce the risk premium for aluminium prices. However, prices are likely to remain supported as the global market continues to face a 1.8 million tonne deficit and tight inventories. Despite higher Chinese exports and the ceasefire reducing the risk of further disruptions, lost production has not been restored, prompting ING Economics to maintain its aluminium price forecast of $3,500 per tonne for the third quarter of 2026 and $3,400 per tonne for the fourth quarter, Manthey said. 

 

At 1053 IST, the three-month aluminium futures on the London Metal Exchange was around 2% lower at $3,304.50 per ounce.  End

 

US$1 = INR 94.68 

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

 

Reported by Reshma Ravi

Edited by Avishek Dutta

 

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