Aluminium Market 2026: Supply Crunch and India Demand Shape Outlook

Aluminum | 2026-08-19 05:10:38 | By Paul Ploumis

Despite price weakness, the market is expected to remain tight, with aluminium prices unlikely to fall below $3,000 per tonne during the rest of 2026.

Summary

LME aluminium prices surged above $3,800 per tonne in June before falling to around $3,100-$3,200 after the West Asia ceasefire.
Global supply remains under pressure, with Gulf production down 20% in H1 and China reaching its 45-million-tonne annual production ceiling.
North America, Europe and India offer stronger demand prospects, while aluminium prices are expected to remain above $3,000 per tonne through the rest of 2026.

SEATTLE (Scrap Monster): The aluminium market is heading into the second half of 2026 with prices, supply and demand moving in different directions. The market faces uncertainties on account of production disruptions and elevated costs. Also, traditional manufacturing demand remains uneven.

LME aluminium prices climbed sharply in early June, with spot prices touching $3,855 per tonne and the three-month contract touching $3,800. Prices later dropped 20% to around $3,100-$3,200 following the West Asia ceasefire. Meanwhile, analysts expect the market to face a supply shortfall of at least 2 million tonnes this year.

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Production losses in the Gulf remain a major concern. Output from the region fell 20% year on year to 2.4 million tonnes in H1. Restarting closed capacity could take more than a year. China, meanwhile, has reached its 45 million-tonne production ceiling.

Demand prospects are stronger in North America and Europe, while Asian consumption remains moderate. India is emerging as a growth market. Domestic aluminium consumption is projected to witness a rise from 4.9 million tonnes in FY2025 to 8.5 million tonnes by FY2030. Also, primary capacity is projected to increase to 6.2 million tonnes.

Despite price weakness, the market is expected to remain tight, with aluminium prices unlikely to fall below $3,000 per tonne during the rest of 2026.