In March 2026, the global base metals market showed marked divergence, with aluminum prices bucking the trend to surge significantly. The monthly increase reached 10.4%, pushing prices close to $3,500 per ton—marking the best monthly performance since April 2024 and making aluminum the standout performer among base metals over the past two years. This strong rebound in aluminum prices was not driven by a surge in demand; rather, the core driver stemmed from severe supply disruptions caused by geopolitical conflicts in the Middle East. The global aluminum industry’s supply-demand dynamics rapidly shifted toward tightness, propelling prices to move independently of broader market trends.
Latest Prices (March 31): LME Aluminum: Closed at $3,424/ton, up 10.4% for the month, marking the best monthly performance since April 2024.
Shanghai Aluminum Main Contract (2605): Night session closed at 24,975 yuan/ton, up 150 yuan (+0.61%).
Domestic Spot Market: On April 1, the SunSirs aluminum benchmark price stood at 24,621.67 yuan/ton, up 5.19% from the beginning of last month (23,406.67 yuan/ton).
Tightening supply is the core driver behind the rise in aluminum prices. As a major global aluminum production hub, damage to production capacity in the Middle East has directly created a significant global supply shortage. In late March, the conflict in the Middle East continued to escalate, with production facilities at several large aluminum companies in the region coming under attack. Core enterprises such as Global Aluminum in the UAE and Bahrain Aluminum were forced to suspend operations; the combined annual production capacity of these two companies exceeds 3.6 million metric tons, accounting for nearly 5% of global aluminum production capacity. These attacks did not merely cause short-term logistical disruptions but resulted in the direct destruction of production equipment. The estimated time for these companies to resume operations ranges from 6 to 12 months, representing an irreversible loss of supply. Combined with the previous shutdown of Qatar Aluminum and production cuts at other regional smelters, over 30% of the Middle East’s aluminum production capacity has come to a standstill, causing a sudden tightening of global aluminum supply. At the same time, Middle Eastern aluminum producers rely heavily on imports of alumina via the Strait of Hormuz. With shipping through the strait currently disrupted, raw material supply is difficult to secure, and companies’ raw material inventories can sustain operations for less than a month, further exacerbating expectations of a supply contraction.
Low inventory levels have amplified the price sensitivity to supply shocks, and the lack of market buffers has driven aluminum prices to rise rapidly. Current LME aluminum inventories have fallen below 400,000 metric tons, reaching a multi-year low. Global visible inventories continue to decline, unable to effectively offset the supply reduction caused by the conflict. Against the backdrop of low inventories, market sensitivity to supply disruptions has significantly increased. Tight spot market conditions have directly driven a sharp rise in the spot-to-futures premium, with the European spot premium surging by over 60% in the short term. The strength of the spot market has further spilled over into the futures market, supporting the continued upward trend in aluminum prices. Compared to other base metals, aluminum has the weakest inventory buffer capacity, which is a key reason for its counter-trend rise amid a broad decline in metal prices.
The domestic market exhibits a pattern of strong external demand and stable domestic conditions, with the price differential between domestic and international markets driving import expectations and supporting domestic aluminum prices to follow the upward trend. The domestic primary aluminum industry strictly adheres to the 45 million-ton capacity ceiling, with capacity utilization rates maintained at around 98%, leaving little room for flexible growth on the supply side. March marks the traditional peak consumption season in China, with demand gradually being released in sectors such as infrastructure, power, and new energy. Downstream production rates are steadily recovering, social inventories continue to decline, and the domestic supply-demand fundamentals remain in a tight balance. Driven by the sharp rise in overseas aluminum prices, the price differential between domestic and international markets has narrowed, strengthening expectations that the import window will open. Domestic aluminum prices have followed the upward trend of international markets, creating a scenario of coordinated price increases between domestic and international markets.
Looking ahead, aluminum prices will likely remain dominated by geopolitical risks in the short term, with a high-range consolidation pattern likely to persist. If the conflict in the Middle East continues to escalate and the supply gap widens further, LME aluminum is expected to challenge the $3,600/ton mark, with SHFE aluminum rising in tandem to around 25,200 RMB/ton. However, one must remain vigilant against the risk of a premium decline should the geopolitical situation ease. Additionally, factors such as the relatively weak recovery of domestic downstream demand and cautious end-user procurement will also limit the upside potential for aluminum prices. In the medium to long term, the combination of rigid constraints on global aluminum production capacity and sustained demand growth from the new energy sector has clearly shifted the price center upward. Going forward, key focus should be placed on the progress of production resumption at Middle Eastern enterprises, the restoration of alumina logistics, and the realization of actual domestic downstream consumption. The evolution of the supply-demand dynamics will determine the medium-term trajectory of aluminum prices.
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