Aluminum Price Trends
Aluminum
Price movements
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Month-on-month Change
Year-on-year Change
Alumina prices continued to fall due to declining demand in the Gulf countries.
Key Takeaways
- Base metals prices on the London Metal Exchange (LME) declined in March against risks of consumption contraction. Only aluminum prices continued their rise, as military activity in the Middle East further reduced supply on a deficit market.
- Market sources point to inflation risks that will lead to declining consumer demand and correspondingly reduced base metals demand globally.
- Indicators pointing to base metals consumption in China for the first two months of 2026 showed decline. In addition, 2025 marked growth in base metals exports from China, which also indicates weak domestic demand. Given that China is the largest base metals consumer, market players are concerned about demand contraction and see this as a risk of the global market shifting toward surplus.
Market Sentiment
- Market sentiment on aluminum differs from other metals, as the military conflict has cut off Persian Gulf supplies, so a deficit will likely persist on the market, say sources.
- Rising energy prices will likely significantly raise aluminum production costs, which will push prices higher, according to players.
Aluminum
Price drivers
Electricity
European electricity prices were volatile in March but averaged flat for the month.
Electricity prices in the US and EU changed marginally on average for the month, though volatility throughout March was high, particularly in the EU. Nevertheless, market sources continue to monitor the situation closely, recognizing that risks of electricity price increases remain high.
Macroeconomics
Annualized headline inflation in China hit a 3-year high in February.
In the US, inflation was 2.4% on an annualized basis in February, unchanged from January. In the Eurozone, inflation accelerated to 1.9% YOY in February, up from 1.7% in January, attributable to increases in unprocessed food and services inflation. In China, the CPI was 1.3% YOY in February, up from 0.2% in January and beating market participants’ forecasts of 0.8%. The result represented a 3-year high.
Interest rates across the US, the Eurozone, and China remain unchanged in recent weeks. In the US, the Federal Reserve paused interest rates at the most recent meeting (January 28) and sources believe that further deceleration in inflation will result in more interest rate cuts in the summer.
The Global Purchasing Managers' Index (PMI) rose 1 point MOM in February to reach 51.9 points, marking the best performance since July 2022. Nevertheless, market sources closely monitor March statistics, where the index will be adjusted for military activity in the Middle East.
Logistics
Military action in the Middle East has increased risks and fuel prices in March.
The average price of Index Shipping 40ft increased by 10.7% MOM and declined by 8.7% YOY to $2,133.04/unit in March.
Aluminum
Price forecast
Aluminum
LME aluminium prices have been on a strong uptrend since mid-2025. The main driver has been persistently tight supply conditions and LME inventory levels near record lows. This tight situation worsened after the US–Iran conflict, which disrupted aluminium production in the Middle East. The conflict also restricted the movement of essential inputs through the Strait of Hormuz. As a result, prices have risen by more than 10% since the start of the conflict in late February and are currently around USD 3,569/mt.
The ongoing conflict poses a risk that aluminium prices will remain high in the coming months. Several major Middle Eastern producers have declared force majeure and stopped production. Additional Chinese supply could partially ease the tightness. However, it is unlikely to be enough to offset global disruptions, and logistical constraints would delay any significant relief.
From a technical perspective, the long‑term uptrend that began in June 2023 remains intact, supporting further price increases. However, signals such as the RSI warn of potential price volatility and short-term price fluctuations, as readings are overbought. Also, seasonally, prices tend to decline after an April peak, which could support temporary price fluctuations and short-term volatility. However, any price corrections are expected to be brief. Depleted inventories and geopolitical risks continue to underpin the market. Overall, volatility is likely to remain high, with prices structurally supported by ongoing supply tightness and news on the US-Iran conflict.
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