The current aluminum industry has entered a new pattern of “supply rigidity+demand resilience”, and price increases are supported by solid fundamentals. Morgan Stanley predicts that aluminum prices will reach $3250/ton in the second quarter of 2026, with the core logic revolving around the dual benefits of supply and demand gap and macro environment.
Supply side: Capacity expansion is limited, elasticity continues to decline
China’s electrolytic aluminum production capacity has reached the ceiling of 45 million tons, with an operating capacity of 43.897 million tons by 2025 and a utilization rate of 97.55%, almost at full capacity, with only about 1 million tons of new space added.
Overseas production capacity growth is weak, with an average annual growth rate of only 1.5% from 2025 to 2027. Europe continues to reduce production due to high electricity prices, while North America is limited in expansion due to power competition in AI data centers. Only Indonesia and the Middle East have a small increase but are constrained by infrastructure.
Green transformation and rising electricity costs have pushed up the industry threshold, increasing the proportion of green electricity in China and implementing carbon tariffs in the European Union, further compressing the living space of high cost production capacity.
Demand side: Emerging fields erupt, total volume steadily grows
The average annual growth rate of global aluminum demand is 2% -3%, and it is expected to reach 770-78 million tons by 2026. Emerging fields such as new energy vehicles, photovoltaic energy storage, and AI data centers have become the core driving forces.
The increase in penetration rate of new energy vehicles has driven the growth of aluminum consumption per vehicle (more than 30% higher than that of fuel vehicles), and the annual increase of photovoltaic installed capacity by more than 20% has supported the demand for aluminum. The demand in the fields of power facilities and packaging has steadily followed suit.
The proportion of direct alloying of aluminum with water has been increased to over 90%, reducing the supply of aluminum ingots in stock and exacerbating the tight market situation.
Macro and market signals: multiple positive resonances
The expectation of global interest rate cuts is clear, and under the trend of a weakening US dollar, aluminum prices denominated in US dollars have natural upward support.
Investors’ demand for physical assets is increasing, and non-ferrous metals, as a choice for anti inflation and diversified asset allocation, are attracting capital inflows.
The copper/aluminum price ratio is at the top of the recent range, becoming an important signal indicator for the subsequent rise in aluminum prices.
Industry Future Trends: Structural Opportunities Highlighting
The supply-demand gap is gradually widening, and Morgan Stanley predicts that supply shortages will manifest from 2026 onwards, with global inventories at historically low levels, further amplifying price volatility elasticity.
Regional differentiation is intensifying, the supply-demand gap in China is widening year by year, and the dependence on imports is increasing, forming a trade flow of “overseas surplus aluminum ingots → China”.
Industry profits are concentrated in leading enterprises with green power resources and energy cost advantages, while production capacity is shifting towards low-cost regions such as Indonesia and the Middle East, but the progress is slower than expected.
Post time: Dec-19-2025