BofA-Global Metals Weekly Aluminium is rebalancing, as surpluses are dedining-20250908

Tight aluminium market; deficit in 2026

Aluminium prices have been well supported in recent months, as global aluminium isrebalancing, reflected in our expectation of a 316Kt surplus this year, followed by a292Kt deficit in 2026. Next year’s shortfalls are heavily influenced by reboundingdemand in the US and Europe, while China’s consumption should hold up. A tighterEuropean market could increase competition for global aluminium units, especiallykeeping in mind that US consumers do not have to pay for the full 50% tariff yet. Thebidding for units could serve as a catalyst for aluminium prices to move higher and weexpect $3,000/t ($1.36/lb) by 4Q26.

Supply growth has slowed to 1.3% YoY YTD

Supply growth has slowed to 1.3% YoY YTD, compared to an average of 2.7% YoY in thepast five years, a key reason why aluminium prices have been so resilient. Indeed, whileChina’s smelters have raised output by 2.3% YoY YTD, that boost has taken operators tothe government-imposed 45Mt capacity cap, so supply increases should now start tosubside. Meanwhile, production ex-China has declined by 0.2% YoY YTD. While we seesome restarts eg 50kt at Century Aluminium’s 229Kt Mount Holly smelter in the US,Indonesia will deliver the biggest output increases to 2030. Yet, our balances suggestthat the market will be able to absorb those units.