Aluminum has been one of the best-performing base metals in 2026, gaining 18.5% in Q4 2025 alone and entering 2026 firmly above $3,000/t. The World Bank's April forecast of a $3,200/mt average has been exceeded by a wide margin, with LME spot prices reaching $3,538/mt on April 28 and now trading at $3,663/mt.
The short-term technical outlook is constructive. The 14-day RSI at 62 indicates bullish momentum without being overextended. Volume has been supportive, and open interest has increased as institutional investors rotate into aluminum on the structural supply story.
The key resistance level is $3,700/mt, representing the upper Bollinger Band on the weekly chart. A break above this level would open the path to $4,000, the next major psychological resistance. Support sits at $3,200/mt (the World Bank annual average) and then $3,000/mt.
The fundamental backdrop supports higher prices in the near term. Tight supply from China's capacity cap, European smelter constraints, and the Mozal closure create a supply deficit estimated at ~365,000 t for 2026 by a survey of 33 analysts.
However, H2 2026 carries downside risk as Indonesian capacity ramps. New smelter capacity in Indonesia is expected to start reaching the market in the second half of the year, potentially pushing prices toward $2,700-2,800/mt by year-end.
With aluminum approaching $3,700 resistance, buyers should structure hedges to manage a two-way risk. Use put spreads with a floor at $3,000 and upside participation up to $4,000. For immediate consumption, phased buying is prudent — fix 60% now, wait for potential Indonesian capacity-driven pullbacks in H2 to fix the remaining 40%.