Aluminium "Middle East supply shock vs demand risk" Major

Research evidence excerpt

Aluminium "Middle East supply shock vs demand risk" Major

Global Research

18 May 2026ab

Aluminium Equities

GlobalMiddle East supply shock vs demand risk

Basic Materials

Daniel Major

Middle East supply disruption to result in deficits despite weak demand Analyst

After adjusting supply for our latest assessment of the impact of disruptions in the ME, daniel.major@ubs.com

we further cut our 2026 global supply forecasts to -1%. We also factor in more +44-20-7568 3472

conservative demand, forecasting cutting growth to <2% due to: (1) slower economic Myles Allsop

growth, particularly persistently weak demand in Europe and deceleration/destocking Analyst

Asia; (2) substitution, particularly packaging in the US due to high LME prices & myles.allsop@ubs.com

premiums. With demand expected to continue to grow vs contraction in primary supply, +44-20-7568 1693

we forecast a 2026 deficit of ~1.8mt. We forecast a recovery in supply in 2027/28 to 3- Amy Yi Li

4%, but also an improvement in demand growth to ~3% (still below the historical Analyst

trend); whilst this narrows the forecast deficit, in the absence of persistently weak amy-yi.li@ubs.com

underlying demand/price induced demand destruction; the aluminium market looks set +44-20-7568 2064

to remain in deficit. After a sharp ME de-escalation fuelled rebound in broader industrial George Eadie

metals LME aluminium positioning remains extended, demand indicators remain soft Analyst

and China inventories elevated; against this backdrop we expect LME prices to george.eadie@ubs.com

consolidate near-term; but in our view improving fundamentals will support higher +1-646-996 4596

benchmark aluminium prices medium-term. Alex Stansbury, CFA

Associate Analyst