The global aluminium market is shifting from a long-term oversupply to a severe shortage
September 20, 2025
The global aluminium market is shifting from a long-term oversupply to a severe shortage. Citigroup has warned that the market is "sleepwalking into its biggest deficit in 20 years", and expects prices to rise from the current $2,700 per ton to above $3,000 and remain high to avoid a global metal depletion.
The inventory situation on the LME is a cause for concern. The total inventory has been hovering around 700,000 tons since May, a significant decline from 1 million tons in the same period last year and 3 million tons four years ago, with a notable drop in exchange liquidity.
There has been a significant shift in the flow of Russian aluminium. Due to sanctions restricting its access to the LME system, a large amount of Russian aluminium has instead flowed into the Asian market, further exacerbating the tight inventory situation on exchanges.
Overseas aluminum production is facing structural challenges. Although the United States has adjusted its tariff policy, high energy costs have led to operational difficulties for smelters in many parts of the world. 32 companies in South Africa have warned that they may close their smelter in Mozambique.
Indonesia is the only hope for new global supply, but Citigroup predicts that its annual production capacity will only reach 2.3 million tons by 2030, far below the planned target of 7 million tons, as new smelters face significant challenges in energy supply.
The demand side continues to strengthen. The demand for aluminum in the new energy and electric vehicle industries is growing rapidly, providing strong support for global consumption and intensifying the pressure of the supply gap.
The aluminium market may witness a historic turning point. The crises of the past three decades were all triggered by oversupply, and the next one will be an unprecedented supply shortage crisis.
