Aluminium bears may be getting it wrong as prices target $3,625 in 2027

Investor sentiment towards aluminium has turned increasingly bearish, but analysts believe the market may be underestimating the metal's underlying strength. Despite growing pessimism, resilient demand and historically low inventories could support higher prices, with analysts forecasting aluminium to reach USD 3,625 per tonne in 2027.

Discussions with market participants have pointed to unusually negative sentiment towards the metal. However, analysts argue that the underlying supply-demand fundamentals paint a more constructive picture, challenging the prevailing pessimism surrounding the aluminium market.

Their assessment follows Norsk Hydro's third-quarter financial results, which showed stronger earnings compared with the previous year but fell short of market expectations.

The Norwegian aluminium producer reported EBITDA of NOK 9.1 billion (USD 988.22 million), marking a 52 per cent increase year on year and a 2 per cent improvement sequentially. However, the figure was 6 per cent below consensus estimates. Higher aluminium prices supported earnings, while rising costs and foreign exchange movements weighed on profitability.

Performance across Hydro's divisions was mixed. Bauxite and Alumina exceeded reduced expectations, while Extrusions outperformed forecasts. Primary Metal, Markets and Energy, meanwhile, delivered weaker results.

Explore the production, demand and consumption forecasts of bauxite and alumina in our report: "Global Bauxite & Alumina Market Forecast to 2036: Supply–Demand, Trade Flows & Price Outlook"

Following the earnings announcement, analysts lowered their 2026 EBITDA forecast for Hydro by 4 per cent to NOK 34.9 billion (USD 3,789.98 million). They also reduced their price target on the company from NOK 98 (USD 10.64) to NOK 92 (USD 9.99), while maintaining a Buy rating. Hydro separately lowered its capital expenditure guidance to NOK 12.5 billion (USD 1.357 billion) from NOK 13.5 billion (USD 1.47 billion).

Operational challenges also remained in focus during the quarter. A temporary interruption in natural gas supplies affected production at the Alunorte alumina refinery. Although production has returned to normal following the adoption of alternative liquefied natural gas (LNG) arrangements, elevated energy costs are expected to continue into the fourth quarter.

Meanwhile, Hydro has initiated the restart of its Slovalco aluminium smelter in Slovakia, targeting annual production capacity of 75,000 tonnes by February 2027.

The company's downstream Extrusions division also showed signs of recovery following an extended downturn. Improving recycling margins, better cost performance and stabilising market conditions supported its third-quarter performance. Analysts expect higher volumes and steadier margins ahead.

Despite the near-term challenges reflected in Hydro's financial performance, analysts maintain that the broader aluminium market outlook remains stronger than investor sentiment suggests. Resilient demand and historically low inventories form the basis of their more optimistic assessment, with the projected price increase to USD 3,625 per tonne in 2027 pointing to the potential for a shift in market sentiment.

Find the right unwrought aluminium for your business. Browse a comprehensive list of primary aluminium products on AL Biz.