Aluminum Rally Driven by Smelter Shutdowns, Supply Crunch: Morgan Stanley

SEATTLE (Scrap Monster): Morgan Stanley has reiterated a bullish outlook for global aluminum prices, citing intensifying supply disruptions in the Middle East and tightening market fundamentals.

The investment bank noted that smelter shutdowns totaling approximately 564,000 tonnes per annum—around 0.8% of global capacity—are underway in the region, largely due to ongoing shipping constraints through the Strait of Hormuz.

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These closures add to existing supply pressures following a 500,000-tonne-per-annum smelter shutdown in Mozambique earlier this month. Despite accounting for nearly 9% of global aluminum output, the Middle East remains heavily dependent on imported raw materials, including alumina and bauxite, much of which must transit through the disrupted strait.

Concerns over feedstock availability are mounting, with reports indicating limited inventories at major producers such as Alba in Bahrain, while Emirates Global Aluminium holds only a short-term buffer. The imbalance between raw material supply and production needs is further tightening the market.

Morgan Stanley has set a bullish price target of $3,700 per tonne for 2026, supported by constrained Chinese supply, slower Indonesian expansion, and limited global capacity growth.