Aluminium futures hovered near $2,640 per tonne, close to a four‑month peak of $2,670 hit on July 24, supported by expectations of tightening supply and stronger demand from China. Reuters+5TradingView+5Trading Economics+5
China is expected to limit its aluminium output this year due to its annual cap of 45 million tonnes, aimed at reducing overcapacity and lowering carbon emissions. Output is already nearing this cap. Discovery Alert+5Reuters+5TradingView+5
The supply constraint from China boosts global sentiment, especially as European demand strengthens. EU countries are ramping up investment in defense industries, which require aluminium for equipment production. TradingViewTradingView
Supply to European factories remains restricted due to sanctions on major supplier Russia, further tightening the market. That constraint is adding upward pressure on prices amid limited global supply. Reuters+2TradingView+2TradingView+2
Chinese infrastructure stimulus also supports demand. A proposed CNY 1.2 trillion hydroelectric dam project signals renewed government spending, raising expectations for stronger metal consumption. Reuters+2TradingView+2TradingView+2
Analysts predict a mild surplus this year, but tight inventory levels help keep bulls in control. Fastmarkets notes aluminium prices jumped 4% in June amid fears over supply disruptions. Fastmarkets
According to a January poll, aluminium is projected to be the strongest performer among base metals in 2025, with analysts estimating a 6.3% increase to $2,573/tonne. A shift to a global deficit is expected by 2026. TradingView+9Reuters+9Reuters+9
That Reuters poll featured a forecasted supply deficit of 8,000 tonnes in 2025, expanding to 365,000 tonnes in 2026 as Chinese output remains capped. Reuters+1Reuters+1
Despite these tight market signals, Goldman Sachs issued a cautious outlook in April, trimming its full‑year average price forecast to $2,000/tonne in Q3, rebounding to $2,300 by year‑end. Reuters
That downgrade was based on weaker global demand growth projections and a forecasted surplus of 580,000 tonnes this year. Longer‑term recovery is expected, with prices rising toward $2,720 by December 2026. Reuters
China’s output cap is a significant anchor. Local production reached 44 million tonnes in early 2025, just shy of the 45 million limit. Authorities focus on closing outdated capacity and promoting cleaner, greener aluminium. Reuters
Improved hydro power capacity in Yunnan and infrastructure support are driving sentiment. Stock levels at SHFE warehouses are declining—a sign of tight supply despite rising local inventories. Energy News
Trade uncertainty remains. Lingering U.S.–China tensions and tariffs may weigh on demand. However, China’s firm supply policy and consolidation efforts are seen as long‑term stabilisers. Reutersm.economictimes.com
Global production growth is now slowing. Reuters reports that China's smelter capacity is nearly fully utilized, with limited expansion potential and rising recycling targets. aluminum.org+2Reuters+2Reuters+2
Opportunities may open for Western producers. With reduced Chinese export flow and constrained domestic growth, U.S. and European aluminium producers could gain market share. Smelters in the U.S. are receiving policy support after years of decline. Reuters
Overall, aluminium prices remain strong around $2,640/t, buffered by supply limits from China and growing demand from infrastructure, defense, and industrial sectors. Still, weak demand or recession risks pose potential downside. Trading Economics
