Aluminum Price Forecast 2024, 2025, 2030: Can the Metal Maintain Its Uptrend?

In the first five months of 2024, the price of aluminum has continued to rise, testing its highs, despite some factors that were initially expected to bolster the base metal price failing to materialize.

The optimism that the U.S. Federal Reserve would begin its interest rate cut in March has faded into the rear-view mirror. The stronger-than-expected U.S. economy has eased the pressure on the Fed to initiate a rate cut. To top it off, China’s economic recovery is not progressing as fast as expected.

Used in various products ranging from soda cans and kitchen utensils to solar panels and aircraft parts, aluminum tested a two-year high of $2,700 on May 21.

Can it maintain its momentum this year and beyond? Let’s explore insights from experts on the aluminum price forecast for 2024, 2025, 2030, and beyond up to 2033.

Table of Contents Table of Contents

1. Key Takeaways
2. Aluminum Price Forecast Summary 2024-2033
3. Aluminum Price 2023: Pressured by Macro Economic Factors
4. Key Drivers Influencing Aluminum Price Forecast
5. Aluminum Price Forecast 2024
6. Aluminum Price Forecast 2025
7. Aluminum Price Forecast 2030 & Beyond
8. The Bottom Line
9. FAQs
10. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Aluminum Price Forecast Summary 2024-2033
3. Aluminum Price 2023: Pressured by Macro Economic Factors
Show Full Guide
4. Key Drivers Influencing Aluminum Price Forecast
5. Aluminum Price Forecast 2024
6. Aluminum Price Forecast 2025
7. Aluminum Price Forecast 2030 & Beyond
8. The Bottom Line
9. FAQs
10. References

Aluminum Price Forecast Summary 2024-2033

Aluminum Price 2023: Pressured by Macro Economic Factors

In 2023, macroeconomics was the dominant factor, dragging the price of aluminum down from its all-time high of $4,100 per ton, reached in March 2022. Russia’s invasion of Ukraine in late February 2022 triggered a price spike across commodity markets, including aluminum.

The record-breaking price quickly plummeted as 2022 progressed after a fresh COVID-19 outbreak swept through China, prompting Beijing to reimpose one of the world’s strictest lockdowns. It halted business activity in the world’s largest producer and consumer of aluminum.

Elsewhere, decades-high inflation resulting from post-pandemic effects left major economies scrambling to implement interest rate cuts. In March 2022, the Federal Reserve increased its benchmark rate for the first time. Other major economies followed the Fed’s footsteps in the following months.

High interest rates increased borrowing costs for businesses and individuals alike, curbing expansion and household consumption. Additionally, the Fed’s hawkish rate hikes in 2022 strengthened the U.S. dollar, making commodities prices denominated in the greenback more expensive for buyers in local currencies.

Aluminum, alongside copper, steel, zinc, and nickel, is highly sensitive to changes in economic activity due to its extensive use in industrial applications and construction.

The silvery, lightweight metal dropped by about 15% in 2022 after gaining 41% in 2021. It marked aluminum’s biggest decline since 2018, when the price fell by 18.6%.

The metal began 2023 on a positive note, climbing to test the $2,662 level in January, buoyed by optimism surrounding China’s economic recovery after the country fully lifted COVID-19 restrictions in December 2022.

However, aluminum prices lost momentum and continued to decline to the $2,100 level, dragged down by unfavorable macroeconomic factors, primarily due to China’s stagnant economic recovery post-pandemic.

The debt crisis in China’s property sector—once one of the country’s primary economic engines—had worsened, curbing demand for base metals. According to S&P Global, the property sector makes up about 30% of China’s aluminum consumption.

Central banks’ monetary tightening also extended through the first half of the year and continued to weigh on base metals prices. Expectations that central banks were nearing the end of the interest rate hike cycle helped support prices in the latter half of the year after the Fed paused the rate hike in June 2023. However, it was not enough to make up for the sluggish demand.

Aluminum price was virtually unchanged in 2023, gaining a mere 0.25%.

Key Drivers Influencing Aluminum Price Forecast

At the time of writing, aluminum is trading at around $2,709/ton, up 13.65% so far this year and 21% year over year (YoY).?

Analysts cited persistent surplus, anticipated stronger demand from China, as well as demand driven by global energy transition, and the recent ban on Russian metals as factors likely to drive the aluminum price forecast for this year.

Let’s explore those factors in detail.

Production Growth to Outweigh Demand

Global aluminum production is expected to experience healthy growth this year, driven by China despite its 45 million tons annual production cap set to slow output growth. The country remains a major supplier, supplying 59% of the global output amid decelerating production growth.

BMI, a country and industry risk research company that is part of Fitch Solutions, estimated global aluminum output to grow by 2% in 2024, totaling 70.48 million tons (mnt), and marginally higher than 1.7% in 2023 in its aluminum forecast on May 24.

BMI said:

“Supply disruptions present a downside to our forecasts. The anticipated energy shortage in hydro-powered Yunnan province, for example, may dent global production capacity.”

Yunnan province is China’s aluminum production hub, contributing around 11-12% of the country’s capacity. Smelters in the province rely on hydroelectric power, which has been underperforming due to dry weather, resulting in frequent output reduction orders for the smelters.

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Energy shortages in the province could limit China’s aluminum output, forecasted to grow by 1.8% to reach 41.6 mnt in 2024, up from from 40.88 mnt in 2023. In the long term, BMI anticipates China’s share of global aluminum output to decline to 50.2% by 2033, coinciding with the country’s annual production capacity reaching 4 mnt.

With modest growth in global aluminum output, BMI expects the surplus in the market to remain, albeit narrowing due to improving demand. The firm expects a surplus of 778kt, which is down slightly from 2023 levels of 1.0mnt.

BMI estimated:

“The aluminum market balance is set for a steep decline over our forecast period as demand rises. We expect the surplus to drop to its lowest level in 2031 before production picks up and pushes the market back into surplus.”

Australia’s Office of Chief Economist (OCE) also expected global primary aluminum output to grow by 1.7% year over year in 2024 to reach nearly 71mn.

In addition to China’s supply, the emergence of new aluminum producers, notably Indonesia and India, is anticipated to further boost output growth for this year, according to OCE.

China’s Demand & Energy Transition to Support Global Demand

Analysts are generally optimistic about a rise in global aluminum consumption this year despite sluggish global economic growth. This is primarily driven by robust imports from China, the world’s largest aluminum consumer.

Despite low demand from aluminum-intensive sectors like construction and manufacturing, BMI estimates that China’s aluminum demand will still grow by about 2.5% year over year.

“We remain optimistic that China’s import demand will remain resilient and uphold global demand,” said BMI, adding that it expects China to take up 62.4% of global aluminum demand in 2024.

Australia’s OCE also projected global primary aluminum consumption to increase by 2.8% in 2024 to reach 72mnt, which is mainly driven by China, as strong electric vehicle manufacturing activity lifts demand.

Elsewhere, aluminum consumption is poised to surge, fuelled by its expanding role in the automotive sector as a lightweight alternative to steel and its rising usage in energy transition initiatives. According to BMI:

“The jump in aluminum demand will also be driven by the packaging industry, where producers are looking to use aluminum as opposed to more traditional packing materials in a bid to become more sustainable.”

Furthermore, BMI expects demand from the construction sector to remain robust as a key driver of aluminum demand.

Impact of Sanction on Russian Output

On 12 April, the U.S. and UK announced new sanctions, banning the delivery of Russian copper, nickel, and aluminum to the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) from April 13 onwards. It is the latest sanctions against Russia’s commodities, from oil, gas, and steel to gold, aiming at reducing revenue used by the country to finance its war in Ukraine.

Governments are not the only ones imposing sanctions against Russian metals. Corporate buyers are also shunning away from Russian commodities.

In March 2023, Bloomberg reported that commodity trader Glencore decided not to renew a $16 billion deal to purchase aluminum from Russian producer United Co. Rusal International when it expires in 2024. However, the company has decided to keep the contract for at least another year, Bloomberg reported on May 22.

BMI stated that self-sanctions from top consumers pose a risk to future production from Russia, the world’s third-largest aluminum producer. The firm forecasts the country’s production to grow by 1.5% in 2024, totaling 3.8 million metric tons, a deceleration from the 2.8% growth seen in 2023.

Furthermore, the firm said, the sanctions on Russian aluminum may prompt key producers, such as Rusal, to accelerate the switch to exporting to Asian markets.

In a note on April 18, ANZ Research’s senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari wrote that Russia had shifted its aluminum exports to Asia as it anticipated sanctions on its major revenue sources.

Asia now accounts for 38% of state-owned Russian producer Rusal’s revenue, according to ANZ Research. China’s imports from Russia have risen from 33kt in 2019 to 1.23mnt in 2023, making up about 37% of Russia’s total exports and up from 10% before the country’s full-scale attack on Ukraine in late February 2022.

Unwanted Russian Supply

While the sanction bans the delivery of these metals to LME warehouses, Russia can still sell them to buyers outside the UK and the U.S. Metals that were already stored in LME warehouses before the sanction can still be legally traded.

Another risk associated with the sanction is the potential flow of off-warrant Russian metals to the market.

Hynes and Kumari said:

“With the amount of aluminum held off-warrant, we see a risk of a flood of metal hitting the market, as aluminum produced before the sanctions are flushed out.”

At the end of March, off-warrant aluminum stock stored in various locations around the world stood at 770,448 tons, surging about 76% from 436,113 tons in December 2023, according to LME data. Aluminum makes up about 85% of off-warrant stocks reported to LME. LME data does not specify the origin of the metal.

In comparison, on-warrant aluminum stock available at LME warehouses stood at 489,250 tons at the end of April.

Aluminum Price Forecast 2024

Most aluminum price forecasts for 2024 show that the price of metal may increase from last year’s, although gains are likely limited by expected soft demand.

ANZ Research forecasts aluminum to average $2,275/ton in 2024, a downward revision from the $2,300 estimated in April but still up from $2,262 in 2023.

Hynes and Kumari said:

“Tight supplies of aluminum are likely to continue, with increasing pressure on Chinese smelters to rationalize power use.”

Fitch Solution’s BMI projected aluminum to trade at $2,400 per ton this year, up from $2,288/ton last year, as weak growth prospects in major economies will cap growth.

BMI said in a note in February:

“We therefore do not see prices nearing the 2022 annual average of USD2,711/tonne in 2024 or over the next few years. However, we remain positive that Mainland China’s aluminum import demand will continue to beat expectations, supported by demand from the green energy sector.”

The firm added that a new stimulus was expected to support China’s economic growth and that it had the potential, although marginal, to send prices higher.

Both Fitch Ratings and the World Bank saw the aluminum price reach $2,300/ton in 2024, up from $2,256/ton in 2023, on subdued demand.

The World Bank wrote in a forecast in April:

“Aluminum demand growth, driven primarily by the automotive and construction sectors, is likely to remain soft this year on the back of limited expansion of industrial activity in major economies, notably China, which accounts for 60% of global aluminum consumption.”

Economic data provider Trading Economics also expected aluminum price to rise to $2,723.80 by Q4 2024, from $2,647.08/ton in Q2.

Australia’s OCE, however, projected that aluminum prices may stay at the 2023 level at $2,299/ton, pulled by various factors. The office mentioned that while China’s primary aluminum demand is expected to strengthen due to development economic stimulus and a push for energy-efficient transport, demand in Europe and the U.S. would depend on central banks’ rate cuts.

Aluminum Price Forecast 2025

For 2025, the aluminum price was projected to continue to climb as improving industrial activity is expected to boost consumption in industries, particularly auto, packing, construction, and renewable energy.

ANZ Research projected the price to reach $2,430 in 2025, up from an estimated $2,275/ton in 2024.

Australia’s OCE’s aluminum price prediction expected the price to rise to $2,424 per ton, while BMI saw the metal to average $2,500/ton.

Fitch Ratings and the World Bank predicted aluminum to trade at an average of $2,400/ton in 2025.

The World Bank expected stronger global activity and growing aluminum demand for EV production and renewable power infrastructure to support prices in 2025 amid an expected strengthening in supply.

According to the bank, Europe is expected to restart more aluminum smelters which are closed due to the energy price shock following Russia’s invasion of Ukraine.

Both BMI and ING projected aluminum prices to average $2,500/ton in 2025.

Trading Economics’ aluminum price forecast for 2025 also saw the metal continuing its uptrend, trading at $2,763.20/ton in Q1 2025.

Aluminum Price Forecast 2030 & Beyond

Fitch Ratings projected aluminum price to steady at $2,300/ton in 2026 and 2027 as future demand growth would require the restart of higher-cost smelters and capacity expansion outside China due to the country’s 45 million tons capacity cap.

Fitch Ratings said:`

“Many international producers have been reluctant to invest in expansion, partly due to the lack of commercially available inert anode technology. However, investments in new capacity in Indonesia and some other Asian countries should ultimately balance the market.”

Sharing the bullish outlook, BMI’s aluminum price forecast beyond 2030 is optimistic. It is fuelled by a steady rise in demand across various sectors, including automotive, construction, renewables, and packaging.

According to the firm’s projections, aluminum prices are set to soar until they reach a peak of $2,900 in 2029. Following this peak, prices are expected to stabilize for a period before gradually declining to $2,700 per ton by 2033

BMI stated:

“A strong medium-to-long-term price outlook will incentivize producers to increase output. Growth will continue to be concentrated in major players in the aluminum market, such as Canada and Australia.”

BMI forecasts global aluminum consumption to increase from 70.8 million tons (mnt) in 2024 to 86.4 mnt by 2033. It expects annual aluminum output growth to average 2.6% between 2024 and 2033.

Adding to the optimism, William Oplinger, President and Director of Alcoa, said during the Bank of America Metals & Mining Conference on 14 May 2024 that the U.S. aluminum producer maintains a bullish stance on the long-term outlook for aluminum.

The positive sentiment was bolstered by the momentum toward renewable energy transition and the global push for decarbonization goals.

Oplinger said:

“Today, there are not enough announced projects to meet that expected demand and future projects face challenges finding renewable energy supplies amid expected increases in carbon emission costs. Even China is adding aluminum to its emission trading system or ETS.”

The Bottom Line

The forecast for aluminum prices in 2024 suggests an increase driven by anticipated stronger demand, particularly from China and the energy transition sector.

However, recent sanctions imposed by the UK and U.S., which prohibit the delivery of aluminum produced by Russia to the LME and CME warehouses, pose downside risks for prices. These sanctions could lead to the release of Russian supply that is not registered at the exchanges onto the market.

Nevertheless, the long-term outlook for aluminum prices beyond 2024 remains bullish. Optimism is fuelled by sustainability and the energy transition drives, which are expected to increase aluminum applications in industrial activity.

FAQs