The aluminum market outlook for the remainder of 2026 points to elevated but moderating prices, with LME cash expected to test the $3,000 per tonne threshold in H1 before settling into a $2,700-2,800 range in H2 as new Indonesian capacity gradually reaches the market. The forward curve structure supports this view, with the contango at the back end of the curve signaling that market participants expect supply-demand conditions to normalize over the next 12-18 months.
Demand fundamentals remain robust. Global aluminum demand is growing at 4-5% annually, driven by electric vehicle manufacturing, data center construction, and building electrification. Each EV contains approximately 200-250 kg of aluminum, up from 120-150 kg in a conventional internal combustion engine vehicle. Data center construction consumes an estimated 150,000-200,000 tonnes annually for cooling systems, power distribution, and server rack infrastructure. Packaging demand remains steady at approximately 2% annual growth, while construction demand reflects regional divergences: strong in Southeast Asia and India, weak in China and Europe.
ING Think projects the global aluminum market will shift to a deficit in 2026, with supply unable to keep pace with demand growth from the energy transition and technology sectors. Risks to the outlook are evenly balanced: upside risks include further production disruptions and faster-than-expected demand growth from AI infrastructure; downside risks include a sharp economic slowdown in China and the potential for US tariff adjustments. The CBAM implementation adds a structural cost floor that will prevent prices from falling below $2,500/t even in a bear case scenario.
Lock in H2 pricing now while the forward curve offers discounts versus spot. The CBAM premium creates a structural floor at $2,500/t. Buyers should evaluate mid-term contracts that bridge the gap until Indonesian capacity comes online in 2027.