Aluminium: Supply gap and thin stocks risk – Commerzbank

Commerzbank’s Thu Lan Nguyen notes that Aluminium production in China has exceeded official caps thanks to high prices and ample alumina, but this may not fully offset disrupted Gulf supply. A major Swiss trader warns of a sizeable 2026 deficit and potentially “paper-thin” inventories by year-end, implying possible supply bottlenecks and pronounced price volatility.

Chinese output versus looming deficit

"In contrast, figures on aluminum production are expected to be released as early as Monday. High prices and an abundant supply of alumina make aluminum production attractive, so that production in the first quarter exceeded the government-mandated production cap."

"This trend likely continued in April, as suggested by China’s increased aluminum exports. However, since supply from the Gulf region is struggling to reach the market, China’s high production is unlikely to put much pressure on aluminum prices."

"Attention in the aluminium market is also likely to increasingly focus on inventory levels. While higher production from China should help alleviate supply shortfalls from the Gulf region (see above), a significant supply gap is likely to remain given robust demand so far, not least due to a resilient Chinese industry."

"A major commodities trader based in Switzerland warns that inventories in the aluminium market could fall to “paper-thin” levels by the end of the year. The company also expects a supply deficit of 2 million tons this year."

"If this were to actually occur, supply bottlenecks could not be ruled out, which in turn would lead to significant price swings."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)