Morgan Stanley: Global supply shortage situation has intensified, and the firm holds an optimistic view on aluminum prices.
March 17, 2026
On Monday, March 16th, due to the continuous disruption of shipping in the Strait of Hormuz and the further shutdown of refineries in the Middle East, Morgan Stanley held an optimistic view on the aluminum price. The bank's report stated that 564,000 tons of annual production capacity in this region is being shut down, accounting for 0.8% of the global production capacity, which has exacerbated the tension in the global market.
The closure of production capacity in the Middle East has exacerbated the supply constraints caused by the shutdown of the 500,000-ton-per-year smelter in Mozambique this month. The Middle East produces 9% of the world's aluminum, but only 3% of alumina and 1.3% of bauxite. Its heavy reliance on the availability of imported raw materials that need to pass through the Strait of Hormuz is becoming a concern for regional smelters. These smelters require approximately 2 tons of bauxite for every 1 ton of alumina produced and 2 tons of alumina for every 1 ton of aluminum produced. According to a report by Platts Energy Information on March 11, Alba's aluminum raw material inventory in Bahrain is very low, while Emirates Global Aluminium in the United Arab Emirates has two to three weeks of buffer inventory.
Morgan Stanley has set a bullish target of $3,700 per ton for aluminum for the fiscal year 2026. The company notes that supply constraints in China, power supply issues causing a slowdown in production increase in Indonesia, and challenges in expanding production in other regions, in addition to supply disruptions in the Middle East, are supporting factors.
The aluminum forward curve has entered a steep spot premium zone, indicating market tightness, while the lowest level area in the London Metal Exchange is experiencing an increasing premium. The full price increases in Japan, Europe and the United States have exceeded the LME benchmark.
