MS-metal ROCK Aluminium：2026 Deficit Rising-20251107

China's capacity cap is here, creating better conditions for aluminium smelter margins: China's aluminium output is reaching its 45 mtpa capacity cap, implying limited further growth ahead. On top, net exports (of primary, semis and scrap) are down 700 kt YTD, reducing supply to the market. China's record supply growth has kept aluminium mainly in surplus and prices close to the cost curve in the last 2 decades, meaning smelter margins may now be able to improve.

Elsewhere, the battle for power is heating up: Electricity-intensive aluminium smelting is competing with rising AI power needs, bring challenges securing LT contracts. This makes restarting the 850 ktpa of idled capacity in the US and Europe more challenging, and also threatens operating smelters where power contracts need to be renewed. According to the US Aluminium Association, smelters need contracts at $40/MWh, vs $100+/MWh agreed with some tech companies (FT).