Bernstein has maintained its aluminium price forecast for the second half of 2026 at $3,100 per ton, despite easing supply concerns following the ceasefire around the Strait of Hormuz and a quicker-than-expected recovery in Middle Eastern production.
Supply Recovery Reduces Geopolitical Risk Premium
Aluminium prices climbed sharply between March and May as tensions surrounding the Strait of Hormuz threatened exports of the metal and imports of key raw materials. Since the ceasefire and the reopening of shipping routes, much of that geopolitical risk premium has faded, although physical supply conditions remain tighter than they were before the conflict.
Middle Eastern output has recovered faster than anticipated. Emirates Global Aluminium (EGA) said production at its Al Taweelah smelter, which has annual capacity of 1.6 million tons, is resuming ahead of schedule. The company added that “a return to pre-crisis shipment levels is expected, based on current conditions, to require the re-opening of the Strait,” while noting that a complete recovery could still take as long as a year.
China Expands Smelting Capacity
Bernstein noted that China is commissioning an additional 740,000 tons of annual aluminium smelting capacity this year, lifting total national output to approximately 45.3 million tons.
While China’s export-focused manufacturing sectors have remained relatively resilient, domestic demand continues to be weighed down by weakness in the construction and real estate industries. Manufacturing activity has stabilised across Europe, Japan and the United States, although underlying demand remains relatively subdued.
Market Deficit Expected to Support Prices
Despite the improvement in supply, Bernstein believes aluminium margins remain comfortably above long-term mid-cycle averages. The research firm also expects the global aluminium market to remain in deficit throughout 2026, providing support for prices above $3,000 per ton before gradually moving back toward longer-term equilibrium levels.