According to JPMorgan, global visible aluminum inventories have dwindled to just 1.9 million tons, sufficient for only nine days of demand. This compares to early 2021, when global aluminum stocks could cover 20 days of consumption. The bank forecasts that aluminum prices on the London Metal Exchange (LME) are likely to surpass $4000 per ton in the coming months. It expects prices to average $3800 per ton in the second quarter and reach an annual average of $3500 per ton. Currently, LME aluminum prices are hovering around $3500 per ton.

The report highlights that following attacks in late March on the Al Taweelah smelter in Abu Dhabi and the Alba smelter in Bahrain, the aluminum market has passed an irreversible turning point based on currently available information. The Al Taweelah smelter, owned by Emirates Global Aluminium, has confirmed a shutdown with repairs expected to take up to 12 months, potentially reducing supply by over 1 million tons by 2026. Meanwhile, only one of the six production lines at the Alba smelter remains operational, with capacity utilization at approximately 30%. Additionally, the extent of aluminum production losses in Iran still requires further assessment.

As a result, JPMorgan anticipates that aluminum production in the Middle East will decline by 36% year-on-year in 2026, equivalent to a reduction of 2.4 million tons. By 2027, output is still expected to be 950,000 tons lower than pre-conflict levels.