The Aluminum Monthly Metals Index (MMI) remained sideways with an upside bias, rising 0.56% from August to September. Meanwhile, the global price of aluminum reached highs not seen since the beginning of the year. Track other MetalMiner monthly indexes here, and compare how the overall industrial metal market is performing.
Aluminum Prices Bullish on Global Supply Concerns
LME aluminum touched a 6-month high by its September 16 close as the price of aluminum broke out of its sideways trend on emerging deficit concerns due to Chinese output nearing its production cap.
For years, China’s aluminum sector fueled global overcapacity. State subsidies gave Chinese producers a significant market advantage, while rising electricity prices and ample global supply presented considerable headwinds for their global counterparts. The West is increasingly working to address this issue through trade barriers, including U.S. tariffs and the EU’s Carbon Border Adjustment Mechanism (CBAM), which offer new threats to Chinese exports.
Meanwhile, domestic demand conditions in China remain soft. The country’s property sector, once a significant consumer of aluminum, remains in the doldrums, with no signs of near-term resuscitation. This forced China to set a 45-million-ton production cap in 2017 and promote a “closed-loop” system, where old capacity must be shuttered before new capacity can be built.
For most of the year, market response to China’s cap appeared somewhat muted, even as global exchange inventories dwindled. By April, Chinese production hit 44 million tons. While output was close to its cap, it hadn’t reached it yet. However, China’s aluminum capacity is estimated to have reached 45.69 million tons in June, raising concerns about what happens if Chinese output flattens. The situation looks especially dire as the world embarks on grid infrastructure projects that would help fuel aluminum demand.
Headwinds for the Price of Aluminum
While deficit concerns have added renewed momentum to aluminum prices, there are reasons to be skeptical about the recent breakout. Though China may have reached its production cap, both Chinese and global output remain on the rise. Data from the country’s National Bureau of Statistics showed Chinese primary aluminum production rose 7.4% year-over-year back in June. This echoes data from the International Aluminum Institute, which shows global production levels have yet to stagger meaningfully.
And while both SHFE and LME exchange inventories are low, they have also begun to rebound. A continued rise would serve to quell supply-side jitters. Rather than exceptional demand conditions, part of the LME drawdown stemmed from the decision to block Russian material from warehouses as a result of the ongoing war in Ukraine. So far, China has helped fill the gap left by Europe as it continues to buy Russian aluminum. Import data showed Chinese aluminum imports rose 38% year over year. So, while sanctions have diverted shipments, they have not removed Russian material from the global market.
Aluminum Demand Falls in the United States
Meanwhile, U.S. tariffs have suppressed U.S. aluminum demand conditions and shifted trade flows. According to the Aluminum Association, North American aluminum demand fell 4.4% during the first half of 2025. Outside of foil, demand reportedly fell in all market segments.
Amid slow demand and tariff pressures, Canadian producers have shifted aluminum deliveries toward Europe. Indeed, recent data showed that Europe’s share of Quebec’s aluminum exports rose from 0.2% in Q1 to 18% in Q2, which has helped to lift LME warehouse stocks off their multi-year lows.
Overall, subdued demand conditions remain a constraint on market sentiment. Back in April, Goldman Sachs reduced its aluminum price forecast as a result of a weaker economic growth outlook. Sachs’ outlook also suggested the possibility of a surplus into 2026 if demand does not recover as strongly as anticipated.
Though long-term deficit concerns remain, the near-term price outlook appears less certain. Economic growth remains ongoing, but slow. Meanwhile, time will tell whether China abides by its production cap and how quickly producers elsewhere around the world can ramp up output to meet the anticipated shortfall.
Aluminum Midwest Premium Reaches New ATH
The Midwest Premium joined the LME aluminum price rally, rising to a new all-time high of $0.7323 per pound. Prices appeared to stabilize by mid-August, just short of the level expected to fully price in the cost of U.S. tariffs.
The recent rise above the $0.73 per pound mark now puts the premium within a few cents of most forecasts. While buyer uncertainty regarding trade policy remains a fixture within the market, domestic conditions appear relatively stable. Simultaneously, mill lead times for most products appear steady or slightly longer.
Biggest Aluminum Price Moves
• Indian primary cash aluminum prices witnessed the largest increase of the overall index, rising by a modest 1.75% to $2.91 per kilogram as of September 1.
• Chinese primary cash aluminum prices rose 1.46% to $2,892 per metric ton.
• The 5052 coil premium over 1050 Korean aluminum fell 5.69% to $4.18 per kilogram.
• The 3003 coil premium over 1050 Korean aluminum dropped 5.86% to $4.08 per kilogram.
• Korean commercial 1050 sheet prices declined by 5.92% to $4.04 per kilogram.
By MetalMiner