What's Happening?
Goldman Sachs has increased its second-quarter aluminum price forecast to $3,200 per tonne, up from $3,100, due to supply disruptions in the Middle East and the shutdown of the Mozal smelter in Mozambique. The bank has removed approximately 850,000 tonnes
from its 2026 supply forecast, reflecting reduced output at Qatalum in Qatar and Aluminium Bahrain (Alba), as well as a significant drop in Iranian output due to energy infrastructure damage. On the demand side, Goldman has cut 600,000 tonnes from its 2026 outlook, citing higher energy prices impacting global GDP growth. The bank now expects a narrower surplus in 2026 and a sharp deficit in Q2 as inventories fall to historical lows.
Why It's Important?
The revised forecast by Goldman Sachs highlights the impact of geopolitical and infrastructural challenges on global aluminum supply chains. The disruptions in the Middle East and Mozambique could lead to increased aluminum prices, affecting industries reliant on this metal, such as automotive and construction. Higher aluminum prices may result in increased production costs for manufacturers, potentially leading to higher consumer prices. Additionally, the forecast underscores the vulnerability of global supply chains to regional disruptions, prompting stakeholders to consider diversifying sources and investing in more resilient infrastructure.
What's Next?
Goldman Sachs warns that extended disruptions to Strait of Hormuz flows could further deepen Middle East curtailments, potentially pushing the 2026 average LME price toward $3,400. Stakeholders in the aluminum industry may need to monitor geopolitical developments closely and prepare for potential price volatility. Companies might explore alternative suppliers or invest in technologies to mitigate the impact of supply disruptions. The situation could also prompt discussions on energy infrastructure improvements in affected regions to prevent future disruptions.
