Global and China aluminum market Report Interpretation

Overview

This China Materials flash summarizes an aluminum expert call with Zijin Tianfeng Futures. The central view is a potentially tighter market in 2026, aided by demand recovery and disruption-related supply losses, followed by a looser 2027 balance as capacity additions and resumptions accelerate.

Core views

The expert expects aluminum demand to recover in 3Q26E. The stated supports are auto-sector peak-season demand, tight scrap-aluminum availability, and strong exports, all of which could support aluminum prices. Countervailing pressures are weak sentiment related to potential Federal Reserve rate hikes and rising overseas aluminum supply. Middle East disruptions are a key part of the near-term supply picture. A total 2.56mntpa of aluminum capacity was suspended because of the Iran conflict. Emirates Global Aluminum's 1.6mntpa capacity was suspended from end-March 2026 and resumed from end-May, but the expert expects a 6–12 month recovery because the stoppage was not orderly. Qatalum, which produced 0.7mnt in 2025, reduced 40% of capacity in an orderly manner from March 2026, while Aluminum Bahrain reduced 0.9–1.0mntpa from March–April. Their orderly cuts are expected to require a shorter 3–6 month resumption period. For 2026E, Indonesia is expected to add 1.1mntpa of capacity, including 430ktpa at KAI, 300ktpa at PT Infinity Aluminum, 180ktpa at Xianfeng Aluminium, and 105ktpa at PT Kemajuan Aluminum. Other additions or resumptions include 334ktpa at Balco in India and 150ktpa at Dak Nong in Vietnam. After accounting for Middle East and other suspensions, however, the expert expects global capacity to fall by 229ktpa and output to decline by 679kt in 2026E. The supply picture changes materially in 2027E. Indonesia is expected to add 1.3mntpa, including 440ktpa from PT SAI, 330ktpa from Weda Bay, and 260ktpa from Nanshan Aluminum. Together with 1.3mntpa of Middle East capacity resumption and 500ktpa of additions in Saudi Arabia, this is expected to produce 3.2mntpa of incremental capacity and 3.3mnt of incremental output, including ramp-up of some 2026 additions. China is also expected to add capacity. The 2026E forecast is 939ktpa, led by 345ktpa from Hongjun Aluminum's phase-two project, 290ktpa of resumed output at Liaoning Xiangyu Aluminum, and 100ktpa at Tianshan Aluminum; this implies 649kt of incremental output year on year. For 2027E, the expert forecasts 180ktpa of Chinese additions and 483kt of incremental output year on year. At the market-balance level, global aluminum consumption is projected to increase 0.9% year on year in 2026E and 1.4% in 2027E, while supply rises 0.2% and 4.9%, respectively. This produces a projected 468kt shortage in 2026E but a 218kt surplus in 2027E. China demand is expected to grow 1.0% in both years. The report notes that prior inventory accumulation in China mainly reflected weak demand from property, autos, and solar power.

Analysis framework

The report uses an expert-led supply-demand assessment: it traces regional capacity suspensions, additions and restart timing, combines these with demand drivers, and translates the resulting output changes into projected global market balances for 2026E and 2027E.

Methodology notes

• Industry AnalysisSupply-demand framework

  Global aluminum supply-demand balance analysis

  The report compares projected consumption growth with supply growth and regional capacity changes to derive the expected 2026 shortage and 2027 surplus.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  End-market demand transmission

  Auto demand, scrap availability, exports, property, and solar power are used to explain how downstream conditions affect aluminum demand, inventories, and prices.

Key data

• Global aluminum balance, 2026E468kt supply shortageConsumption is expected to rise 0.9% YoY versus 0.2% supply growth.
• Global aluminum balance, 2027E218kt supply surplusConsumption is expected to rise 1.4% YoY versus 4.9% supply growth.
• Middle East suspended capacity2.56mntpaAffected by the Iran conflict.
• Global capacity and output change, 2026E-229ktpa capacity; -679kt outputAfter additions and resumptions are offset by suspensions.
• Global incremental capacity and output, 2027E3.2mntpa capacity; 3.3mnt outputIncludes Indonesian additions, Middle East resumptions, Saudi additions, and ramp-up from some 2026 additions.
• China capacity additions, 2026E939ktpaImplying 649kt incremental output YoY.
• China demand growth1.0% YoY in 2026E and 2027EThe report links prior inventory accumulation to weak property, auto, and solar demand.

Impact & implications

The report's balance forecasts suggest that supply disruption and a potential demand recovery could support aluminum in 2026, whereas the much larger pipeline of capacity additions and resumptions is expected to shift the market toward surplus conditions in 2027.

Risks

• Potential Federal Reserve rate hikes could weaken sentiment and pressure aluminum prices.
• Increasing overseas aluminum supply could pressure aluminum prices.
• The expected demand recovery may be constrained if key end markets remain weak.

What to watch

• Auto-sector demand during the 3Q26 peak season, scrap-aluminum availability, and export demand.
• The pace of Emirates Global Aluminum's restart, expected to take 6–12 months after its disorderly suspension.
• The 3–6 month expected restart timing for orderly curtailments at Qatalum and Aluminum Bahrain.
• Execution and ramp-up of Indonesian, Saudi Arabian, Chinese, and other planned capacity additions.