HSBC-India Aluminium Global supply-demand dynamics support positive aluminium outlook-20251128

We incorporate HSBC's new 4-8% higher LME priceassumptions for CY26e/27e of USD2,750/t and USD2,850/t

Global aluminium supply tightness is becoming increasinglyevident and appears structural in nature

We continue to prefer Aluminium; we reflect updated LMEforecasts and raise TPs for Buy-rated Hindalco and NALCO

Supply tightness appears structural: We expect the aluminium market to moveinto a progressively tighter balance in 2026 as constrained supply meets risingdemand. We expect global primary aluminium demand to increase by c1.8% in 2026,supported by strong electrification activity, steady EV production, and continuedexpansion in grid-related cable demand. Meanwhile, we expect global supply growthto remain limited at c1.6%, driven primarily by new capacity ramp-ups in Indonesia.We expect previously curtailed capacity that is scheduled to restart to have only alimited impact in 2026. With China’s domestic supply effectively capped, we expectsystem elasticity to remain low, meaning even modest incremental demand couldmaterially tighten the global balance.