Aluminium gains as LME prices approach highest levels since May 2022

Aluminium prices saw a slight uptick of 0.21 per cent, closing at USD 284.5. This rise is owed to the positive trend in London Metal Exchange (LME) aluminium, which climbed to nearly USD 2,970 per tonne, reaching its highest point since May 2022.

The rise in the aluminium price is deemed to have some stability because the supply-side concern grew after South32 revealed that its Mozal smelter in Mozambique will go into care and maintenance by March 2026 due to ongoing power supply challenges. This certain revelation can lead to a tighter global supply in the coming year.

Apart from this, other disruptions, like at Iceland’s Grundartangi smelter and Japanese ports, which witnessed a drop of 5.2 per cent in their inventories month-on-month and finally settled at 312,100 tonnes. This combination is really affecting market sentiment.

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Producers worldwide are looking at much higher premiums, which are expected to be somewhere between USD 190 and USD 203 per tonne for shipment and the rise is scheduled to range between January and March, representing a tightening of physical markets. However, due to the renewed demand raised from China, the weak economic data contributed further to the sentiment and the gains were capped.

China's aluminium production rose by 2.5 per cent year-on-year, which hit 3.79 million tonnes in November, 2025. This output brought the country closer to the annual output cap of 45 million tonnes. On the other hand, the inventories tracked by the Shanghai Futures Exchange (SHFE) saw a slight uptick.

Also read: LME aluminium price trend: Historical context, 2025 market dynamics & 2026 price outlook

Globally, the overall primary aluminium production witnessed a marginal upward movement, but China's total imports of unwrought aluminium decreased by 14 per cent year-on-year in November. Irrespective of this, a split outlook holds, where ANZ raised its near-term target price for improving the demand prospects. On the other hand, Goldman Sachs also expects the price to ease in 2026 due to a surplus.

At the technical front, the global market will continue to experience a short covering, where the open interest is expected to dip by 21.64 per cent to USD 1,564, while the price will gain at 0.6. Nonetheless, aluminium will be supported at USD 283.8, with testing at USD 283.1. On the upside, resistance is at USD 285.4 and the prices, with some push, may also reach near USD 286.3.

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