Aluminum Price Surpasses 25,000 CNY/Ton, Global Supply Shortage Underpins High Prices

On March 5, 2026, the spot price of domestic A00 aluminum ingot broke through the 25,000 CNY/ton mark, with the SMM A00 aluminum spot quote rising to 25,110-25,130 CNY/ton and the average price reaching 25,120 CNY/ton, an increase of over 7% from February 27. The main Shanghai aluminum contract strengthened in tandem, with an intraday increase of over 4% to 25,275 CNY/ton, while LME aluminum surged to 3,418 USD/ton, hitting a new high since April 2022. Both domestic and international aluminum prices witnessed a sharp rally.

The strong upward trend of aluminum prices is mainly driven by continuous disruptions in the overseas supply side and the escalation of geopolitical conflicts. Since March, the Middle East has become the core area of supply disruptions: Qatar Aluminium has launched an orderly shutdown of its 650,000 tons of annual capacity with no clear resumption time; Aluminium Bahrain has suspended aluminum ingot shipments due to force majeure, with its 1.622 million tons of annual capacity maintaining production but delivery hindered. Meanwhile, Mozambique's 580,000 tons of electrolytic aluminum capacity is still at risk of shutdown, with the total affected overseas capacity exceeding 1.85 million tons. Combined with previous factors such as high electricity prices in Europe and the shutdown of African aluminum plants, the global electrolytic aluminum supply gap has continued to expand. Institutions latest predict that the global gap will reach 2.05 million tons in 2026, far exceeding previous expectations.

The domestic supply side is constrained by a rigid production capacity red line with no room for new release. In 2026, China's 45 million tons/year electrolytic aluminum production capacity red line will continue to be strictly enforced, and new capacity can only be realized through equivalent or reduced replacement, with replacement projects meeting stringent energy consumption and environmental protection standards. As of December 2025, China's operating electrolytic aluminum capacity has reached 44.59 million tons/year with a capacity utilization rate of 98%, operating near full load. The remaining compliant capacity space is less than 1 million tons, and the capacity increment will further narrow in 2026, leaving almost no elasticity on the supply side.

In terms of inventory and market sentiment, the low global aluminum inventory provides strong support for prices. As of March 3, LME aluminum ingot inventory fell to 461,125 tons, a nearly 10% decrease from the January high, with inventory only meeting about 5 days of global consumption demand, a 5-year low. Although domestic electrolytic aluminum social inventory rose to 1.256 million tons due to seasonal factors, the risk aversion and bullish expectations brought by the overseas supply gap still drive strong willingness of traders to maintain prices, creating a strong bullish atmosphere in the market.

The resilient growth on the demand side has further consolidated the foundation for high aluminum prices. The global electrolytic aluminum demand growth rate is expected to be raised to 4% in 2026, with new energy vehicles and photovoltaic energy storage becoming the core growth engines. Among them, the aluminum usage per new energy vehicle has increased to 240kg, and photovoltaic installed capacity has grown by 30%. These two sectors alone will add more than 1.1 million tons of demand. Demand in traditional infrastructure and real estate sectors has also stabilized and rebounded with the increase in global investment. Coupled with material substitution trends such as "aluminum replacing copper", the demand scenarios for aluminum continue to expand.

Institutions generally believe that the pattern of aluminum prices being prone to rise and hard to fall at high levels has been established. Morgan Stanley set the 2026 bull market target price for aluminum at 3,700 USD/ton, and Huayuan Securities pointed out that domestic capacity has peaked and overseas project progress is slow, pushing the electrolytic aluminum industry into a shortage pattern. In the short term, the geopolitical situation in the Middle East and the progress of overseas smelter shutdowns remain the key factors affecting prices. In the medium and long term, the global supply gap, rigid domestic capacity constraints and the upgrading of demand structure will jointly support the aluminum price to maintain an upward cycle, with a potential price peak in the second quarter.