Aluminium: Supply shock risk supports prices – ING

ING’s Ewa Manthey and Warren Patterson report Aluminium prices above $3,500/t after unconfirmed reports of major Gulf smelter disruptions at EGA and Alba. They estimate that confirmed halts and curtailments could remove around 3 mtpa of capacity, deepening deficits across scenarios, while constrained Chinese and Indonesian supply keeps fundamentals supportive despite potential demand destruction from weaker global growth.

Gulf outages deepen Aluminium deficit risks

"Aluminium prices rallied above $3,500/t on Thursday after reports that Emirates Global Aluminium (EGA) halted operations at its Al Taweelah smelter after the site was hit by Iranian missiles and drones over the weekend, according to Wood Mackenzie."

"If confirmed, a halt at EGA’s 1.6 mtpa Al Taweelah smelter, Alba’s reduced operations and earlier curtailments at Qatalum would take around 3 mtpa of capacity offline – close to half of Middle East aluminium production."

"This would imply materially deeper aluminium deficits across all our scenarios, lifting the severe disruption case to around 2-2.5 Mt, with even the base case now pointing to a deficit of roughly 1 Mt."

"With Chinese supply capped, Indonesia’s ramping up constrained by power and limited capacity growth elsewhere, aluminium’s fundamentals remain firmly supportive."

"LME aluminium prices are up around 17% year‑to‑date, with the forward curve in steep backwardation."

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