The aluminium industry is entering a new phase. For decades, the global market has been defined by surplus. Inventories on the London Metal Exchange (LME) underpinned a thriving financing trade, and China’s vast production growth kept supply more than abundant. But that picture is changing fast. The market is now heading toward its tightest conditions in two decades.
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Global investment financial and banking services Citi has warned that the world is sleepwalking into the biggest deficits in 20 years. The bank expects aluminium prices to rise beyond USD 3,000 per tonne and stay elevated to prevent shortages. This marks a stark shift for a market historically shaped by oversupply.
China hits the ceiling
China has been the engine of global supply, producing 60 per cent of the world’s aluminium. Output rose from four million tonnes in 2002 to 43 million tonnes in 2024. Yet Beijing’s capacity cap of 45 million tonnes a year means growth is nearing its limit. According to the aluminium-focused market intelligence firm AZ Global, China’s annualised production rate reached 44.5 million tonnes in August 2025.
Exports of semi-fabricated aluminium products fell 9 per cent in early 2025, while imports of primary metal rose 11 per cent, signalling the country’s shifting trade dynamics. Sanctions on Russian aluminium have further tightened available exchange stocks. Registered and off-warrant inventories at the LME are now barely 700,000 tonnes, down from over three million just four years ago.
Recycling steps into the gap
With primary production growth stalling, attention is turning to recycling. On 14 August 2025, market analysis projected the global aluminium recycling sector to expand from USD 107 billion in 2023 to USD 160 billion by 2032. Its unique advantage lies in infinite recyclability, using only 5 per cent of the energy of primary aluminium and slashing CO₂ emissions.
A European metals analyst notes, “We are seeing recycled aluminium become a mainstream material choice rather than an alternative.” Automakers, beverage firms and construction players are pushing recycled content as a premium feature in response to carbon reduction pressures.
Yet challenges remain. High-grade scrap such as ADC12 and 6xxx series alloys are in short supply, squeezed by competition between China, Europe, and the US. A senior executive from a leading producer said that recycling was not just an environmental move but also a profitability strategy.
The twin pressures of capped primary output and constrained scrap supply suggest aluminium may no longer be abundant. Aluminium’s defining risk is shifting - from oversupply to scarcity - reshaping pricing, trade, and industrial strategy.
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