Global aluminum inventory is only: 9 days!
The flames of war in the Middle East have severed the global aluminum supply chain. Global aluminum inventories are as thin as paper—only enough for 9 days.
According to Wind Trading Desk, on April 13, JPMorgan’s commodity research team released an in-depth report on the aluminum market titled "Into the Void," pointing out that the global aluminum market is facing the toughest supply crisis in over twenty years due to heavy hits from the Middle East conflict.
Global visible aluminum inventory (exchange inventory plus social inventory) is currently about 1.9 million tons, equivalent to only 9 days’ worth of demand.
How tight is this number? For comparison: At the beginning of 2021, global inventories covered about 20 days of demand, and in some regions outside Asia, it was up to around 40 days. The current buffer space is less than half of what it was back then.
Supply "Event Horizon": Middle East Losses 2.4 Million Tons
JPMorgan uses the black hole "event horizon" metaphor (the dividing line in spacetime) to describe the current situation—once this critical point is crossed, no matter how the subsequent situation develops, supply losses are irreversible.
The report believes that, as information on losses at the Abu Dhabi Al Taweelah smelter and Bahrain Alba smelter from the March 28 attacks continues to be disclosed, the aluminum market has "likely crossed this threshold."
Specifically:
- Al Taweelah Smelter (under EGA, annual capacity 1.5 million tons) has been confirmed to stop production, repair cycle up to 12 months, and will reduce supply in 2026 by more than 1 million tons from this single instance.
- Alba Smelter (Bahrain) currently estimates only lines 4 and 5 are stopped (on top of previous shutdowns of lines 1-3), only line 6 is operating, capacity utilization is about 30%, which matches the preliminary assumption by Wood Mackenzie.
- Losses in Iran's production remain to be further assessed.
In summary, JPMorgan expects Middle East aluminum output to drop 36% year-over-year in 2026, a loss of about 2.4 million tons; in 2027, output will still be about 950,000 tons less than pre-conflict forecasts.
The global supply side will see net cuts of nearly 2 million tons, which will be the first annual contraction in global aluminum output since 2019.
Other Regions Struggle to Fill the Gap
Can the gap be filled elsewhere? JPMorgan’s answer: Very difficult, at least not before 2026.
China: JPMorgan has raised its China supply forecast by about 300,000–400,000 tons per year for 2026–2028, reasoning that high prices and better margins will push capacity utilization toward the 450,000 tons per year cap. But the report clearly states the probability of China raising its capacity cap is "relatively low"—this cap has been part of China's long-term policy framework since 2017, a result of anti-overcapacity policy. Even if policy loosens, actual production response takes months or even quarters, offering limited help for 2026.
Indonesia: JPMorgan has slightly raised its 2026 Indonesia supply forecast (thanks to faster commissioning of the Kaltara project), expecting full-year output to rise by about 1 million tons, and 4Q26 annualized increase is about 1.4 million tons over 4Q25. Bigger increases are expected not until 2027 and beyond.
Europe: Due to high energy prices (most smelters shut after the 2022 energy price shock), there is almost no room for restarting. Mozambique’s Mozal smelter (annual capacity 580,000 tons) is a potential restart candidate but also faces a long ramp-up and power supply issues.
With supply dropping sharply, the demand side is also being reshuffled. JPMorgan has lowered its global primary aluminum demand growth forecast for 2026 from over 1.7% to 1.4%.
Price Trajectory: Asymmetric Upside, Target $4,000
JPMorgan’s core view: Aluminum price’s upward trajectory has formed an asymmetric structure—no matter how the situation evolves, prices tend to rise.
- If the situation escalates further: Greater disruption of the Strait of Hormuz, more damage to smelting infrastructure, broader shutdowns driven by alumina supply, deeper supply shock.
- If the situation clearly de-escalates: Macro-risk tail fades, demand expectations improve, but supply losses have become fixed, so aluminum prices may be even stronger.
Currently, LME aluminum prices struggle to sustain above $3,500/ton, partly because commodity investors’ long positions are quite crowded. But JPMorgan believes as the supply shortage becomes more apparent in the physical market, prices will accelerate upwards.
JPMorgan expects aluminum prices may break through $4,000/ton in the coming months, Q2 average price forecast is $3,800/ton, and full-year average about $3,500/ton.
The report also notes that if a prolonged closure of the Strait of Hormuz triggers a severe macroeconomic recession, the demand shock could far exceed current forecasts, and aluminum prices could see a much bigger decline within the year.
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The above highlights are from Wind Trading Desk.
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