Aluminium: Price outlook shifts lower as market rebalances – TD Securities
TD Securities strategists have downgraded its Aluminium price outlook as supply recovers and demand softens. They now expect Aluminium to average $3,378/t in 2026 and $3,281/t in 2027, projecting smaller deficits and a move toward market balance while still ruling out a major rout.
Prices seen lower but supported
"Speedier Middle East smelter ramp-ups, increased Indonesian supply, robust Chinese semi-fabricated exports, and weaker demand have prompted TD Commodity Strategy to downgrade our aluminium price outlook. As the market moves closer to supply-demand balance next year, we expect prices to average $3,378/t in 2026 and $3,281/t in 2027, down 5.0% and 9.8% from the previous forecast."
"We now project deficits of 1.2 million tonnes and 234 thousand tonnes in 2026 and 2027, respectively. This stands in sharp contrast to the earlier consensus view of a 2.5-3.0 million tonne deficit in 2026 and a 1.0-1.5 million tonne shortfall in 2027."
"With the forward curve shifting from backwardation, which peaked at $100+/t during the height of the crisis, into contango amid expectations of improved near-term supply conditions, both we and many in the market no longer expect prices to reach new highs above $3,780/t. Indeed, our price forecasts have been revised lower by 5.0% for 2026 and 9.8% for 2027."
"With the market projected to remain in deficit over the next eighteen months and a meaningful risk that Indonesia and the Middle East fail to deliver the expected increases in supply due to technical challenges or a renewed flare-up of violence, which could again disrupt production in the Gulf region, makes a rout unlikely. It is also possible that China limits semi-fabricated exports in the months ahead to reduce the risk of trade action from its major trading partners."
"As such, we believe the market has become somewhat oversold from both a fundamental and technical perspective. Combined with a reduced incentive to liquidate long positions, this suggests the metal should find significant support within the $3,100-3,400/t trading range through 2027."
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