Aluminum prices are likely to remain resilient in the very near term, investment research firm BCA Research says, supported by constrained Chinese primary supply and a wide copper-aluminum price spread.
However, the firm expects those supports to fade in 2026 as deteriorating cyclical conditions weigh on demand and prices.
Constrained Chinese primary aluminum production remains a key near-term support. China is approaching its 45 million metric tonne annual capacity cap, first introduced in 2017 and reiterated in the 2025–2027 Action Plan.
“In other words, Chinese primary aluminum output is nearing its limits,” Roukaya Ibrahim, chief commodity strategist at BCA, said in a note.
This marks the end of a multi-decade expansion that accounted for more than 80% of global primary aluminum supply growth. With little evidence that production outside China has meaningfully accelerated, supply-side dynamics are still supportive for prices in the short run.
Demand-side factors have also helped. Aluminum’s wide discount to copper has encouraged substitution in certain applications, particularly electrical uses.
Aluminum prices have risen alongside copper in recent months, and “as long as the red metal’s premium remains wide, substitution is likely to act as a tailwind to aluminum demand and prices,” Ibrahim said.
But heading into 2026, that outlook is expected to change. Ibrahim expects deteriorating global manufacturing conditions to weigh on prices, pointing to weakness in the new orders component of the global PMI.
He expects the PMI to break into contraction territory next year, adding that this slowdown will pressure aluminum demand and reduce its appeal as a substitute if copper prices also retreat.
On the supply side, the strategist believes increased Chinese secondary production and overseas capacity expansion by Chinese producers will help offset the loss of Chinese primary aluminum production growth.
Electricity costs, which differ significantly across regions, are expected to play a key role in shaping how quickly global aluminum production responds to limits on Chinese primary output, Ibrahim said.
