Aluminium set to outshine in 2025: Supply deficit predicted

Aluminium is set to be the standout performer among London Metal Exchange (LME) base metals in 2025, with analysts predicting a supply shortfall this year that could drive prices higher.

According to the latest Reuters January base metals poll, analysts expect zinc, copper, and tin to see higher average cash prices in 2025 than in 2024.

On the flip side, nickel remains the clear bearish bet. After plunging nearly 22 per cent in 2024, no one anticipates a reversal, with oversupply projected to persist through this year and into the next.

Source: Reuters base metals analyst poll median forecasts

While supply dynamics will play a key role in determining winners and losers, global economic uncertainty continues to overshadow the broader industrial metals market.

Median forecasts for copper, tin, nickel, and lead have been revised downward since Reuters' last quarterly poll in October, driven by concerns over the impact of a tariff-driven trade war on demand.

According to the median forecast of 33 analysts surveyed in January, the average LME cash aluminium price increased by 4.9 per cent year over year in 2024 and is projected to rise by another 6.3 per cent to $2,573.50 per metric tonne in 2025.

This forecast remains largely unchanged from the October 2024 poll, reflecting growing confidence in the metal's bullish outlook.

A shift in market dynamics from surplus to deficit is driving the price surge. Analysts now anticipate a supply shortfall of 8,000 tonnes in 2025, a sharp reversal from the previously expected surplus of 100,000 tonnes. The deficit is projected to widen significantly to 365,000 tonnes in 2026, pushing the average aluminium price even higher to $2,626 per tonne.

The recent tightness in the alumina market has supported aluminium prices, but China's cap on smelter capacity remains the more significant structural supply constraint.

Explore the key trends, challenges, and opportunities shaping the global aluminium industry and its evolving market dynamics in 2025 and beyond to understand the industry and its future better. The industry-focused report, Global Aluminium Industry Outlook 2025, provides valuable insights into production forecasts, demand patterns, sustainability initiatives, and technological advancements driving the future of aluminium worldwide.

Top image credit: LME

Information credit: Reuters