Aluminium Is Trading At A 4-Year High
LME cash aluminium reached ₹3,57,120 per tonne (USD 3,720) on May 21, 2026. Stocks are down 28% year-on-year. The market has flipped into backwardation, meaning cash aluminium now costs more than 3-month forward contracts, a signal traders call physical scarcity.
The reason is concentrated. Gulf smelters are partly offline. The Strait of Hormuz is under intermittent shipping restrictions. The UAE and Bahrain together supplied 23% of US aluminium imports in 2025. That supply is choked.
What This Means For Buyers
JPMorgan projects a 1.9 million tonne global deficit in 2026. Wood Mackenzie's worst-case scenario is 4 million tonnes. Bank of America has set a price target of ₹3,84,000 per tonne (USD 4,000) for Q4 2026. India is already feeling it. Billet shortages are forcing downstream extruders to slow production. MCX aluminium futures are at record levels. Japanese quarterly premiums hit an 11-year high of ₹33,600 per tonne (USD 350).
Why The Squeeze Will Persist
Even if Gulf production resumes tomorrow, pot line restarts take 3 to 6 months. Indonesia is adding 705,000 tonnes of new capacity, but 70% of its exports go to China. The deficit has no quick fix. China sits on a 45-million-tonne production cap. There is no spare capacity waiting in the wings.