On Monday, May 18th, Citi stated that after experiencing a major supply shock, the aluminum market is currently facing the most bullish trend in over 50 years. It is expected that the price will rise to $4,000 per ton in the short term, and there is a possibility of a further significant increase.
The war in Iran has triggered an unprecedented crisis in the global aluminum market, which may cause devastating chain reactions in numerous industries such as construction, packaging, transportation and green energy.
Citigroup pointed out that the supply loss of over 3 million tons, mainly due to the turmoil in the Middle East, has pushed the market into a structural shortage situation, as spare capacity is nearly zero and inventories have reached a 55-year low.
The bank predicts that even in the case of weak demand, there will still be a shortfall of approximately 2.7 million tons this year, which will cause inventory levels to drop to historical lows within the next 6 to 12 months.
Citigroup believes that if the extent of demand disruption is limited, the aluminum price is expected to steadily rise to $4,000 per ton within the next three months; the average price in the second half of 2026 is expected to remain at this level, and in an optimistic scenario for 2027, the price will rise to $5,350 per ton.
On Monday, the LME (London Metal Exchange) quoted the price of aluminum for the next three months at approximately $3,570 per ton.
Citigroup analysts said: "Although short-term fluctuations and portfolio reductions may put pressure on prices, in the absence of a severe economic recession, the downward potential seems to be increasingly limited."
Citigroup pointed out that due to supply constraints in China and insufficient growth in supply outside China to make up for the ongoing gap caused by the unrest in the Middle East, the supply elasticity of the entire system has declined. The bank stated that only in the event of a severe global economic recession would inventories stabilize; even then, it would be difficult for inventories to recover.
Citigroup pointed out that if the impact of the energy shock on economic activities is less severe than the market currently expects, the aluminum price may rise further in the later stage of the cycle and gradually tighten the market structure over time.
