Key takeaway from Global Commodity Conclave 2026 - Oil shocks, supply risks and shrinking stocks keep aluminium prices volatile in 2026

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Price volatility has emerged as one of the most pressing issues for the global aluminium industry in 2026. India, experiencing the same, is also facing the additional impact of currency movements and rising domestic costs.

This is the issue being prominently featured at the three-day conference Global Commodity Conclave 2026, organised by the Multi Commodity Exchange of India (MCX). Among many key insights regarding aluminium price shocks, the most interesting takeaway was the aluminium market’s sensitivity to the surge in crude oil prices and supply disruptions arising from the Middle East conflict.

According to S&P Global, the rise in oil prices due to the Middle East conflict has translated into an aluminium price increase. As per the American publicly traded corporation, LME aluminium rallied alongside Brent, with spot premiums widening during peak volatility. Despite the mid-2026 pullback, both LME cash and 3-month aluminium remained roughly 30 to 40 per cent above their 2024 baseline.

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The graph below illustrates the co-movement of Brent crude oil and LME aluminium prices during the period of heightened volatility. To know how crude oil price affects aluminium production and why it matters to aluminium producers, read “Why does a barrel of oil matter to aluminium producers? A hidden link between petroleum coke, prebaked anode and the metal itself”

As of early June, LME aluminium offer price had reached a year-to-date high of USD 3,855 per tonne just when the Brent crude oil price peaked at USD 97.99. In mid-August, the price declined and hovered around USD 3,248 per tonne, with the three-month offer price at USD 3,244 per tonne. But despite the correction from the June high, aluminium continued to trade well above its earlier baseline.

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Speaking to AL Circle on the sidelines of the conclave, Manoj Kumar Jain, Director and Head – Commodity & Currency, expressed a similar view, stating aluminium prices have been in a volatile state for the past two to three months, primarily due to the Middle East crisis. He added the aluminium price on MCX rose to INR 400 per kg during the peak of the disruption, equivalent to USD 4,190.65 per tonne on LME due to the supply concern.

He also said that given the Middle East’s 7 to 8 per cent contribution to the global primary aluminium supply chain, the US-Iran tension was the main cause of the price hike in June and July. We saw the LME price rise to almost USD 3,400 per tonne, but now, when the tension is easing with the US President’s intent peace deal with Iran, we are seeing a slowdown in the prices.

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Mr Jain, however, is hopeful, and he says overall the base metal market is doing well, with LME stocks going down. So, in the short to medium term, we see a good consolidation in the prices, and prices are sustaining above the USD 3,200 major resistance level of LME. So, we are predicting the prices will again regain momentum and are likely to touch USD 3,400-3,440 per tonne on LME and INR 380-382 per kg in the domestic market.

Enquiring about the impact of the price hike on end-use consumption, he explicitly said the phenomenon will naturally pass down to end-use products, and ultimately the consumers will have to bear the cost, leading to inflation in end-use products.

At the end, he quoted that India is ready to move from being a price taker to a price maker as the country now has its domestic price-driven contract listed at MCX, and it is a rupee-denominated contract settled in INR, and also it can give and take deliveries in the domestic exchanges. Considering the country is ready with the necessary market infrastructure, certainly, this availability of a domestic price-driven commodity or domestic currency contract will help India become a price maker from a price taker.

Note: This is exclusive coverage by AL Circle and may not be reproduced, republished or shared without prior permission.