The Aluminum Market Amid Geopolitical Turbulence

In 2026, the industry faced a significant imbalance. According to industry experts, the deficit of primary aluminum could reach 2.1 million tons—a figure comparable to the most acute crisis episodes of recent decades. This situation reflects not merely short-term price fluctuations but a transformation of the fundamental conditions of market functioning, where logistical risks and regional production vulnerabilities are becoming key pricing drivers.

The dynamics of exchange indicators confirm rising tensions. On the London Metal Exchange (LME), in the first quarter of 2026, aluminum futures contracts exceeded $3,400 per ton for the first time since 2022, and in April prices peaked at $3,670. Forecasts by leading analytical institutions point to the continuation of the upward trend: JP Morgan analysts allow for prices to rise to $4,000 per ton in the short term, while consensus estimates form a range of $3,500–3,800 for the second half of the year. Such levels indicate the formation of a stable risk premium integrated into the metal’s price alongside fundamental supply and demand parameters.

Damage to the infrastructure of companies such as Aluminium Bahrain BSC (Alba) and Emirates Global Aluminium PJSC (EGA) led to large-scale production cuts: total capacity losses are estimated at about 4% of global output. An additional pressure factor was Alba’s declaration of force majeure due to the inability to carry out shipments amid escalating tensions in the Strait of Hormuz. Threats to shipping in this strategic corridor triggered higher insurance rates and regional premiums, intensifying inflationary pressure on metal prices.

Supply chain disruptions create systemic risks for consumers forced to urgently seek alternative sources. At the same time, the ability to quickly compensate for lost volumes is objectively limited. China, which dominates global production with a share exceeding 60%, is approaching environmental limits that restrain output growth potential. In developed Western economies, spare capacity is virtually absent, while sanctions regimes impose additional constraints on the redistribution of flows.

In this context, the role of Russian producers becomes particularly significant, although it remains subject to external restrictions. RUSAL, one of the largest global players, demonstrates stable operations; however, its ability to replace volumes lost from Middle Eastern suppliers is objectively limited by a number of factors. Modernization of Siberian plants and capacity optimization allow the company to adapt to changing conditions, but rapid production scaling without significant cost increases appears unlikely. Nevertheless, amid the destabilization of traditional logistics routes, the physical availability and reliability of supplies from Russia become competitive advantages.

In April 2026, a record increase in exports of Russian aluminum to South Korea was recorded—purchase volumes rose by 21.5% compared to March, enabling Russia to take a leading position among suppliers to that country. A similar trend is observed in trade with China, which remains the largest buyer of Russian metal. These changes reflect the formation of a new demand configuration, where consumers seek to diversify supply sources and minimize risks associated with geopolitical instability in traditional supplier regions.

The long-term prospects of the market largely depend on the industry’s ability to adapt to new realities. Indonesia, actively developing bauxite processing, is gradually reducing the global market’s dependence on Middle Eastern supplies, which in the medium term may contribute to stabilizing the balance of supply and demand. However, in the short-term horizon, the likelihood of persistently high prices and a moderate deficit remains significant.

Thus, the current situation illustrates the growing role of geopolitical factors in shaping commodity cycles. The aluminum market, traditionally perceived as relatively resilient to external shocks, in 2026 demonstrates high sensitivity to regional crises, requiring industry participants to revise risk management strategies and diversify supply chains.

Author: Candidate of Economic Sciences, Associate Professor of the Department of World Economy and World Finance, Financial University under the Government of the Russian Federation Natalia Ivanovna Chovgan.