According to Reuters on February 4, aluminum is expected to be the best performing variety of base metals on the London Metal Exchange (LME) in 2025, and analysts predict that the light metal will suffer a supply shortage this year.
Analysts who participated in a Reuters base metals survey in January also expect average spot prices for zinc, copper and tin to be higher this year than in 2024.
Despite the nearly 22% drop in the LME average spot price of nickel in 2024, nickel remains a bearish signal. No one expects nickel to escape its oversupply this year and next.
Supply dynamics are at the top of analysts' minds when it comes to the potential ups and downs of base metals markets this year, but the gloomy macroeconomic outlook is casting a shadow over the entire industrial metals sector.
Median forecasts for copper, tin, nickel and lead have all been cut since Reuters' last quarterly survey in October, reflecting concerns about the impact of the tariff trade war on demand.
Average LME aluminium spot prices rose 4.9 per cent year on year in 2024 and are expected to climb another 6.3 per cent to $2,573.50 a tonne in 2025, according to the median forecast of 33 analysts taking part in the January survey.
The result was little changed from the October survey, indicating growing confidence in the prospects for higher aluminum prices.
Underpinning the higher price forecast is an expected shift in market dynamics toward supply shortages. Analysts' consensus forecast has shifted from an oversupply of 100,000 tonnes in the last survey to a shortfall of 8,000 tonnes in 2025.
The supply shortage is expected to increase to 365,000 tons in 2026, and the average price will further rise to $2,626 per ton.
The recent tightness in the alumina market has driven prices higher, but the bigger structural supply constraint is China's control of smelting capacity caps.
By the end of 2024, China's annualized production was 43.9 million tons, close to the ceiling of 45 million tons.
If the world's largest aluminium producer has no potential to expand, it is hard to see how the rest of the world can fill the gap.
