Aluminum Prices Surge to Six-Week High on Global Supply Woes, Century-Low Stocks
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Aluminum prices on the London Metal Exchange surged to $3,216.40 per tonne, the highest in six weeks, as global production outside China fell 6.7% in July from a year earlier and exchange inventories dropped to their lowest this century. The supply squeeze tightened further after Alcoa cut its production forecast due to disruptions at its Australian refinery. The rally persisted even as new smelting capacity is set to come online later this year.
Global Production Decline
Global aluminum production excluding China fell 6.7% in July compared to a year earlier, driven by reduced output at some Western Asian smelters and maintenance disruptions. China continues to enforce its 45-million-ton annual production capacity cap, limiting further supply growth. Alcoa also lowered its 2026 production forecast after operational issues at its Australian refinery, adding to the tightness.
Record-Low Exchange Stocks
London Metal Exchange aluminum inventories have dropped to their lowest level this century, as geopolitical concerns prompted consumers to draw down stocks. The supply squeeze pushed LME three-month aluminum futures to $3,216.40 per tonne in late July, the highest in about six weeks. The backwardation in the market signals persistent near-term scarcity.
New Smelting Projects on Horizon
Several capacity additions are planned to ease the shortfall. Slovakia's Slovalco smelter aims to restart production in the fourth quarter of 2026, while a new facility in Missouri, United States, is expected to come online by year-end. Emirates Global Aluminium continues to expand its Al Taweelah plant. Analysts warn that the timeline for these projects remains uncertain and may not quickly resolve the supply-demand imbalance.
What's Next
The market now watches whether the planned restarts can materialize on schedule, especially with persistent geopolitical risks and energy cost pressures. It remains unclear if new supply will arrive in time to prevent further price spikes in coming months.
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Aluminum Prices Surge to Six-Week High on Global Supply Woes, Century-Low Stocks
