Citigroup and BMI both Lower Aluminium Price Forecast, Price of the Metal Seen Peaking after 2025

SHANGHAI, May 25 (SMM) – According to foreign news on May 23, Fitch Solutions' BMI lowered its forecast for the average price of aluminium this year, down from the previous $2,600/mt to $2,500/mt.

In its outlook for aluminium prices, it said prices may remain under pressure this year, struggling to return to 2022 highs, as global demand remains weak and domestic supply in China, the world's largest aluminium producer, increases.

Still, BMI expects prices to improve from current levels later this year as China's real estate sector recovers.

In the longer term, BMI expects aluminium prices to remain elevated as demand is underpinned by an accelerated transition to a green economy, while supply remains constrained.

On the demand side, BMI noted aluminium prices were under pressure due to a weaker-than-expected recovery in China's manufacturing sector and weak domestic consumption.

Outside of China, demand in the construction, packaging and automotive sectors will remain weak due to the gloomy global macroeconomic outlook.

The agency therefore expects a fairly modest increase in aluminium demand in developed countries this year, before rebounding in 2024.

On the supply side, BMI expects China's aluminium production to climb 2.2% year-on-year to 40.9 million mt this year and 2.8% in 2022.

Despite weakening demand, inventories are expected to remain tight compared to historical levels this year as China's non-manufacturing sector continues to grow.

In the longer term, aluminium is expected to average $2,700/mt in 2024, up from 2023 levels, as demand rebounds and inflationary pressures ease, BMI said.

In addition, the agency expects aluminium prices to peak at $2,900/mt in the second half of this century as the green energy transition accelerates to support demand for the metal.

After 2025, BMI expects production growth in China to be constrained, helping to narrow the global aluminium glut.

CITI also lowered its price forecast for aluminum in 2023 from $2,561/mt to $2,475/mt.

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