The monthly aluminum metal index (MMI) remained in a sideways consolidation with a slight upward trend, rising by 0.56% from August to September. Meanwhile, global aluminium prices have reached a new high since the beginning of the year.
Global supply concerns have driven up aluminium prices
Market concerns over supply shortages have gradually emerged, and aluminum prices have broken through the sideways consolidation trend. The aluminum price on the London Metal Exchange (LME) reached a six-month high at the close of trading on September 16.
Over the years, global overcapacity has intensified. Demand remains weak.
Despite the decline in global exchange inventories, for most of this year, the market's response to China's aluminum production cap seemed rather lackluster. By April, China's aluminium output reached 44 million tons. Although the output is close to the upper limit, it has not yet been reached. However, it is estimated that China's aluminium production capacity reached 45.69 million tons in June, which has raised concerns about what will happen if China's output stabilizes. The situation looks particularly severe as power grid infrastructure projects that help stimulate aluminum demand are launched one after another around the world.
Aluminum prices are facing resistance
Although concerns over supply shortages have injected new impetus into aluminium prices, there are also reasons to be skeptical about the recent breakthrough. Although China may have reached its production ceiling, production in China and globally is still on the rise. Data from China's National Bureau of Statistics shows that China's primary aluminum (electrolytic aluminum) output in June 2025 was 3.81 million tons, up 3.4% year-on-year. This echoes the data from the International Aluminium Institute (IAI), which shows that global production levels have not yet experienced a significant decline. Data released by the International Aluminium Institute shows that global primary aluminium production in June was 6.045 million tons, up 0.9% year-on-year.
Although inventories at the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME) are both at low levels, they have also begun to rebound. Continuous inventory growth will help allay supply-side concerns. Part of the reason for the decline in inventory at the London Metal Exchange is not a special demand situation, but rather the LME's decision to prevent Russian materials from entering warehouses due to the ongoing war in Ukraine. So far, China has continued to purchase Russian aluminium materials, thus filling the gap left by Europe. Therefore, although the sanctions have shifted the direction of exports, they have not removed Russian aluminium from the global market.
The demand for aluminium in the United States has declined
Meanwhile, US tariffs have curbed the demand for aluminum in the United States and altered the flow of trade. According to the Aluminum Institute of America, aluminum demand in North America dropped by 4.4% in the first half of 2025. Demand in all market segments except aluminium foil has declined.
Under the pressure of slowing demand and tariffs, Canadian producers have shifted their aluminium exports to Europe. In fact, recent data shows that Europe's share of Quebec's aluminium exports rose from 0.2% in the first quarter to 18% in the second quarter, which has helped push warehouse inventories at the London Metal Exchange out of multi-year lows.
Overall, sluggish demand remains a constraint on market sentiment. As early as April, Goldman Sachs had lowered its aluminum price forecast due to the weak economic growth outlook. Goldman Sachs 'outlook also points out that if the demand recovery is not as strong as expected, there could be an oversupply by 2026.
Although concerns over long-term supply shortages persist, the short-term price outlook seems less certain. Economic growth is still ongoing, but at a slow pace.
The premium of aluminium in the central and western regions has reached a new high
The Midwestern aluminium premium followed the rise in LME aluminium prices, reaching a record high of $0.7323 per pound. By mid-August, prices seemed to have stabilized, slightly below the expected level that fully reflected the cost of US tariffs.
Recently, the price has broken through the $0.73 per pound mark. Currently, the gap between the premium and most predictions has narrowed to just a few cents. Although buyers' uncertainty about trade policies still exists in the market, the domestic market situation seems relatively stable. Meanwhile, the factory delivery cycles of most products seem to remain stable or have slightly extended.
