Supply tightness to keep aluminium prices firm through 1HFY27: Report
New Delhi, July 15
Global aluminium prices are expected to stay firm in the first half of FY27, hovering between USD 3,000 and USD 3,300 per tonne, as supply tightness persists due to the delayed restart of idled smelters, 360 ONE Capital said in a report.
The report noted aluminium prices surged 43 per cent YoY in 1QFY27, averaging ~USD 3,535/tonne, which further reflects an increase of 11 per cent on QoQ. Additionally, LME aluminium prices also surged to around USD 3,500/t before correcting from their peak levels.
As per the report, "The recent rally in aluminium prices has been driven primarily by the geopolitical crisis in West Asia."
The report attributed the recent supply tightness to the shutdown of major aluminium smelting capacity in the Middle East, which accounts for nearly 9 per cent of global primary aluminium production.
It added that the closure of the Strait of Hormuz has disrupted aluminium exports and curtailed imports of key raw materials, affecting supply chains across industries such as automotive, aerospace, packaging, and construction. "We estimate the total supply disruption from the Middle East at ~3.4 MT," it said.
On the alumina front, the report said average LME/Platts alumina prices have remained largely stable in recent months, but have edged up from the March low of around US$300 per tonne to about US$305-308 per tonne currently.
"In our view, alumina prices are close to bottoming out and can gradually trend higher from current levels, aided by tighter bauxite/alumina fundamentals and aluminium's structurally strong demand outlook," it added.
Highlighting that restarting idled smelters typically requires 6-12 months, the report said supply is unlikely to normalise immediately.
"Going forward, we expect aluminium prices to remain in the range of US$ 3,000-3,300/tonne during 1HFY27 (our base case assumption is US$ 3,150/tonne for FY27), supported by the ongoing supply tightness," it said.
360 ONE Capital, however, expects the current supply deficit to gradually ease, with the market likely to stabilise by 2HFY27 as disrupted facilities resume operations and new capacities are progressively commissioned.
— ANI
Reader Comments
Good news for Hindalco and NALCO shareholders! 📈 But bad news for the common man. The construction sector is already struggling with high input costs. Let's hope our domestic production can step up and reduce dependence on imports. Government needs to look at strategic stockpiles.
The report says supply won't normalize for 6-12 months. But India has huge bauxite reserves! Why aren't we ramping up our own smelting capacity instead of waiting for the world? We should have learned from the chip shortage - time to be self-reliant. Atmanirbhar Bharat in metals! 💪
As someone working in manufacturing, this is frustrating. We're seeing input costs rise even before we've recovered from the pandemic-era inflation. The 43% YoY surge mentioned is massive. Management is already talking about passing costs to consumers. Not looking good for Q3 earnings.
But what about the environmental impact of new smelters? 😬 Aluminium production is energy intensive. While we talk about Atmanirbhar, we also need to think about green alternatives. Maybe this is a cue to invest more in aluminium recycling - much less energy and emissions. Jugaad hai toh mumkin hai!
Small business owner here. I just got quotes for aluminium sheets and they've gone up 15% in two months. The report says prices will stay high for another year. How is a small fabricator supposed to survive? We need government intervention - reduce import duties on raw materials temporarily.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.