Aluminium: Surplus Coming Faster

Research evidence excerpt

Aluminium: Surplus Coming Faster

IdeaMthat has been stockpiled during the conflict. Based on roughly one month of pre-strike

production at Al Taweelah, four months of (still running) Jebel Ali output, partial Alba

production and four months of Qatalum at 60% utilisation, we estimate a maximum of

~870 kt could have accumulated. Adjusting for estimated volumes already moved out by

truck during the conflict, with AICircle noting that 40-60% of Alba's exports were being

rerouted via Jeddah and EGA similarly shifting logistics through Sohar, the figure is more

likely 400-500 kt, in our view. The release of this material could provide temporary relief

to the aluminium market and further ease near-term tightness - already timespreads and

physical premiums have been moderating. However, any re-escalation of tensions in the

Middle East would likely delay any outflows.

Supply growth is also accelerating elsewhere: Chinese investment has driven the recent

build out in new Indonesian capacity, but production has been constrained by power

availability. However, nickel policy changes are prompting producers, including Tsingshan,

to reallocate power to aluminium, allowing production growth to be brought forward. We

now model output rising from 1.55 Mt in 2026 to 2.84 Mt in 2027 and 4.2 Mt in 2028.

Elsewhere, Chinese investment is also adding capacity in Angola (500 ktpa across three

smelters), Kazakhstan (East Hope's 1 Mtpa complex) and Saudi Arabia (500 ktpa

Chuangxin project), alongside Western restarts at Slovalko (75 ktpa) and Magnitude 7 (75

ktpa). Longer dated projects, including a proposed 750 ktpa EGA/Century smelter in the

US and a potential 2 Mtpa Indian project from IHC/Adani, add further supply upside.