Analysis of Global Aluminum Market – Supply, Demand & Trade Flow Dynamics

The global aluminum market is currently characterized by a distinct divergence between Chinese and overseas markets. Overseas markets have performed strongly amid supply-side disruptions, while the domestic market has also strengthened due to similar supply disturbances but remained relatively weak compared with the LME. Details on supply, demand, trade and market structure are as follows:

I. Overseas Aluminum Market: Prominent Supply Tightness and Sustained Pressure on Inventories

The core contradiction in overseas aluminum markets lies in supply contraction and low inventory levels, exacerbated by geopolitical conflicts, further intensifying supply tightness.

In terms of LME inventory data, current inventories remain on a continuous downward trend, greatly weakening their supportive role in the market. Historically and recently, LME cancelled warrants peaked at 178,000 tonnes earlier, accounting for 39% of total inventory. As a result, the effectively available LME inventory has dropped to its lowest level since May 2025, further highlighting tight overseas supply.

Supply contraction has widened the market deficit, with production cuts at two key projects—EGA and Alba—having a particularly significant impact.On March 28, EGA’s Al Taweelah smelter in the UAE and Alba’s plant in Bahrain were attacked, causing equipment damage and sharply raising risks of capacity disruptions. This came on top of earlier disruptions:

• March 15: Alba reduced output at three production lines due to shipping disruptions in the Strait of Hormuz;
• March 12: Qatar’s Qatalum smelter suspended 40% of capacity due to natural gas supply cuts.

Overseas primary aluminum supply deficits are expected to continue widening. Meanwhile, high energy costs in Europe have also reduced local semi-fabricated aluminum output, further tightening supply.

Supply tightness has directly driven a sharp rise in overseas spot premiums. Amid supply concerns from escalating Middle East geopolitical conflicts, the Q2 MJP premium rose by approximately USD 156.5/t to USD 351.5/t.

Specifically, major regional premiums rose markedly at end-March:

• CIF South Korea: from USD 168/t (early March) to USD 292/t;
• CIF Thailand: from USD 183/t to USD 317/t;
• European Duty Unpaid: from USD 345/t to USD 400/t;
• US Midwest DDP: from 103.75 cents/lb to 105.5 cents/lb.

This fully reflects that expectations of tight primary aluminum supply have enabled sellers to push up quotations.

Downstream demand and purchasing patterns vary significantly across regions:

• South Korea: Phase-wise restocking completed; weak downstream restocking sentiment, limited demand support.
• Southeast Asia: Dominated by term contract execution with limited spot restocking; insufficient incremental buying momentum.
• Europe: Rising supply shortage concerns amid production cuts in Qatar and Bahrain; downstream restocking underway, relatively strong demand.
• United States: Low inventories entering a restocking cycle, providing moderate market support.

II. Chinese Aluminum Market: High Inventory Pressure, Weak and Constrained Demand

In contrast to strong overseas markets, the domestic aluminum market has strengthened amid supply disruptions but underperformed relative to the LME, characterized by high inventories and constrained demand.

High domestic aluminum prices have continued to suppress downstream purchasing. Current buying is mainly order-based rigid demand, with low willingness for active restocking, providing limited upward support.

Domestic inventory pressure has not eased effectively: primary aluminum inventories remain elevated, and inventory destocking has progressed slower than expected, likely prolonging the digestion period.High inventories and high prices form dual constraints. Although the domestic market has upward momentum, it is weaker than overseas. Domestic spot premiums are expected to remain under pressure and further widen in the short term.