LME aluminum for three-month delivery collapsed to $3,150 per metric ton on June 25, down 3.5% in a single session. The move caps a brutal month for the lightweight metal: it has lost 16.2% since late May and is now trading 18.3% below its 2026 high of $3,855. The selloff is broad-based; every base metal fell on June 25, but aluminum is the hardest hit.
COMEX aluminum futures dropped an extraordinary 13.7% to $3,225/mt, though low liquidity in the COMEX aluminum contract can amplify moves. The fundamental picture for aluminum has been deteriorating for weeks. China -- which produces 59% of the world's primary aluminum -- set a new monthly production record in May at 3.65 million tonnes.
Chinese aluminum smelters are operating at approximately 95% of capacity, with Yunnan province ramping up after hydropower restrictions eased. Combined with weaker demand from European construction and manufacturing, the market has swung from a modest deficit in Q1 to a growing surplus in Q2.
On the cost side, alumina prices have been falling, reducing the cost floor for smelters. Alumina -- the feedstock for aluminum production -- has fallen roughly 15% from its March peak, removing what had been a key support for aluminum prices. The current LME price of $3,150 is now testing the marginal cost of production for higher-cost smelters, estimated at $2,900-3,100/mt.
Aluminum is in freefall, and the surplus is growing. Procurement teams with Q3 aluminum needs should not rush to lock in fixed prices — the trend is still down. Consider floating-index pricing for July–August deliveries, and only layer in fixed-price coverage if LME aluminum tests the $2,900–3,000 cost floor. For Q4, wait. The surplus is likely to deepen before it narrows.