SMM News, May 25:
Since late February, geopolitical tensions in the Middle East have escalated. According to SMM estimates, nearly 4 million metric tons of overseas primary aluminum capacity have been cut successively, including production curtailments at aluminum smelters in Mozambique. While new capacity additions and restarts of primary aluminum production in the US, Spain, Iceland, Indonesia and China have accelerated, their total volume still falls short of the production cuts. SMM projects that a supply gap of over one million metric tons will persist across the global primary aluminum market in 2026.
Driven by the above factors, overseas aluminum prices have rallied sharply. The LME 3-month aluminum price is currently fluctuating around USD 3,600 per metric ton. Although high domestic inventories have put some pressure on domestic aluminum prices, expectations of a supply gap have provided solid underlying support. Over the past two months, the lowest price of the main Shanghai aluminum futures contract has stayed above RMB 24,000 per metric ton.
Buoyed by elevated aluminum prices, a slew of new overseas primary aluminum projects have been announced, and scheduled projects have seen progress accelerated to varying degrees. As of late May, SMM data shows that the total planned new overseas primary aluminum capacity for 2026 and beyond stands at 17.095 million metric tons. Of this total, 2.315 million metric tons are expected to come online in 2026, among which around 570,000 metric tons have already commenced production from January to May. The remaining 1.745 million metric tons of new capacity are set to ramp up production or start powering up gradually. Planned capacity for 2027 totals 2.03 million metric tons, while capacity scheduled for 2028 and the longer term reaches 12.75 million metric tons.
By comparison, at the start of 2026, SMM recorded total planned overseas primary aluminum capacity for 2026 and beyond at only 10.595 million metric tons, representing a net increase of 6.5 million metric tons to date. The 2026 planned commissioning capacity was initially about 1.38 million metric tons and has now risen by 935,000 metric tons. The 2027 projected capacity stood at 1.625 million metric tons earlier, with an additional 405,000 metric tons added so far. Overall, surging aluminum prices have greatly expedited the development of new overseas primary aluminum projects.
(Including a small amount of capacity commissioned in 2025)
Data Source Disclaimer: All data other than public information are processed and derived by SMM based on public information, market communications, and SMM's internal database models, for reference only and do not constitute investment advice.
