Aluminum Breaks a Key Psychological Level
Supply pressure meets long-term demand
Aluminum prices surged above $3,000 per metric ton for the first time in more than three years, reflecting growing concern over global supply constraints and sustained demand from infrastructure and clean-energy projects.
The rally puts aluminum alongside other base metals that have recently pushed through major milestones, reinforcing the broader strength across industrial commodities.
Aluminum futures gained 17% last year, marking their strongest annual performance since 2021.
What’s Driving the Aluminum Rally
China caps output, Europe faces power costs
Several structural factors are tightening aluminum supply:
- China has capped smelting capacity, limiting output growth from the world’s largest producer
- European producers continue to struggle with elevated electricity costs, curbing production
- Global inventories have steadily declined as supply fails to keep pace with demand
At the same time, demand remains resilient from:
- Construction and infrastructure projects
- Renewable energy buildouts
- Electric vehicle and grid modernization efforts
Together, these forces are compressing the supply-demand balance and pushing prices higher.
Copper Extends Its Historic Run
Supply disruptions add fuel
Copper also resumed gains after posting its largest annual increase since 2009, driven by persistent supply disruptions across major producing regions.
Key factors supporting copper prices include:
- Mining accidents in Indonesia, Chile, and the Democratic Republic of the Congo
- Tariff uncertainty prompting traders to accelerate shipments into the U.S.
- Structural demand tied to electrification, AI infrastructure, and power grids
Copper traded near $12,487 per ton, keeping it the top performer among the six major industrial metals on the London Metal Exchange.
Nickel Jumps on Indonesian Supply Risks
Policy delays put traders on edge
Nickel prices climbed after PT Vale Indonesia temporarily halted mining operations following delays in government approval of its work plan.
While the company said approval is expected soon and that long-term operations remain intact, traders are increasingly sensitive to supply risks after Indonesia signaled plans to cut nickel output this year.
Nickel rose to around $16,845 per ton, capping its strongest monthly performance since April 2024.
Iron Ore Ticks Higher
Muted moves amid holiday closures
Iron ore futures in Singapore edged up to approximately $105.65 per ton, though gains were modest with Chinese markets closed for a public holiday.
WSA Take
Industrial metals are flashing a clear signal: supply discipline is colliding with long-duration demand. Aluminum’s break above $3,000 isn’t just a headline — it reflects structural constraints that aren’t easily reversed. With electrification, renewables, and infrastructure spending still driving consumption, metals markets may remain tighter — and more volatile — than investors expect.
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Disclaimer
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