Citi sees aluminium prices recovering to $3,500 despite the recent 20% correction

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Aluminium prices are likely to bottom or find a floor over the coming month before staging a recovery in the second half (H2) of 2026, according to a fresh market outlook from the global bank, Citigroup or Citi. 

Between September and December, aluminium is expected to trade in the range of USD 3,300-3,500 per tonne, supported by improving macroeconomic conditions as well as tightening market metrics.

Citi’s positive outlook was backed by a more dovish US Federal Reserve, easing real rates, increasing demand and declining inventories measured in days of consumption.

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The bank noted that the recent aluminium price correction was driven by a combination of weaker-than-expected demand, slower inventory drawdowns, easing geopolitical concerns surrounding the Middle East conflict, liquidation of investor and physical positions, and expectations of additional supply entering the market.

Over the past month, aluminium prices have retreated by nearly 20 per cent from around USD 4,450 per tonne, testing the bullish momentum that had supported the market for more than a year.

Despite the sharp decline, Citi believes the downside is becoming limited and does not consider aluminium an attractive bearish trade at current levels.

The bank noted that the market had entered the recent correction in a supply deficit, while any returning production is unlikely to ramp up quickly enough to offset the expected demand growth. China's steady enforcement of its primary aluminium capacity cap is another factor that adds to the supply concerns.

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