Commerzbank’s Thu Lan Nguyen highlights that aluminium production in China has surpassed official government caps, driven by high prices and an abundant supply of alumina, making production particularly attractive in the first quarter of the year [1]. This trend likely persisted into April, as evidenced by increased Chinese aluminium exports [1]. Despite this surge in Chinese output, ongoing disruptions in aluminium supply from the Gulf region mean that the additional Chinese production is unlikely to exert significant downward pressure on global aluminium prices [1].
Market attention is shifting towards aluminium inventory levels, as robust demand—especially from a resilient Chinese industry—continues to outpace supply [1]. A major Swiss commodities trader has warned that aluminium inventories could fall to “paper-thin” levels by the end of the year, raising the risk of supply bottlenecks and pronounced price volatility [1]. The same trader forecasts a supply deficit of 2 million tons for the current year [1].
If these projections materialize, the aluminium market could experience significant supply constraints, leading to sharp price swings [1]. The combination of disrupted Gulf supply, strong demand, and potentially record-low inventories underscores the risk of heightened volatility in the aluminium market for the remainder of the year [1].
CONCLUSION
Despite increased Chinese aluminium production, the market faces a projected 2 million ton supply deficit and the possibility of record-low inventories by year-end. These factors point to a high risk of supply bottlenecks and significant price volatility, keeping market participants on alert for further developments.