Aluminium Price Trends: Price Overview and What to Expect in 2025

Aluminium, a cornerstone of modern industries like automotive, construction, packaging, and renewable energy, is integral to global supply chains. Its price trends can significantly impact business operations, especially for manufacturers and suppliers. 

Staying informed on these trends equips businesses to make data-driven decisions, ensuring competitiveness and profitability in volatile markets.

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Current Aluminium Price Overview

As of December 2024, aluminium prices have showcased mixed trends.

• The London Metal Exchange (LME) Cash Settlement Price (CSP) for December averaged at $2,538.43 with average stock of 6,71,203.
• The highest CSP was observed on 5th December at $ 2,620.50

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Aluminium Price Overview 2024

• As per Metal Miner, the volatility in the prices of aluminium was driven by factors such as Chinese policies, trade disputes, and supply chain disruptions.
• Additionally, slowing demand and trade barriers, along with the closure of a major US aluminum producer, constrained the aluminum market in 2024 despite a nearly 10% increase from 2023.
• With China's export tax rebate ending and alumina prices rising, aluminum prices are expected to fluctuate in the coming months. Potential trade policy changes and geopolitical tensions could influence the market's future as well.

Key Highlights:

• Disruptions in the Red Sea saw freight rates spike during the JMF Quarter. While the impacts extended far beyond the aluminum market, the situation nonetheless affected the price of imports, limiting their competitive effect on domestic prices.
• By the end of Q1, prices started to rally alongside other base metals. Aided by a substantial increase in long bets by investment funds, prices surged throughout Q2, breaking above their 2023 peak by late May. 
• Aluminum prices found a peak on May 29 at their highest level since June 2022. This milestone was aided by the copper reaching a peak several days earlier.
• Unlike other base metals, which declined during Q4, aluminum prices remained resilient. China’s decision to end its 13% export tax rebate and surging alumina prices offered support.
• However, it remains to be seen whether the end of the tax rebate will push Chinese prices lower to maintain export demand or result in higher prices for end users. Nonetheless, Chinese aluminum exports hit their highest level since 2022, boasting a 37% rise during November ahead of the December 1 rebate termination.

What to expect in 2025?

As per Shanghai Metal Market article, here are top things to expect from the Aluminium Market in 2025

1. Alumina Shortages to Ease in 2025

China's bauxite deficit hindered production expansion, and Australia's output cut further shook international markets. A shortage of bauxite in China slowed production growth, while a reduction in output from Australia further disrupted global markets. Alumina production fell 1.16 million tonnes from 2023 as a result of several significant setbacks, including the closure of Alcoa's Kwinana refinery, environmental delays that affected South32, and problems at Rio Tinto's Gladstone operation.

There is some optimism for 2025 because it is anticipated that the supply of alumina would surpass the demand, which could lower the price of aluminum.

2. From Deficit in 2024 to Surplus in 2025

Supply-Side Developments

China’s aluminium production remains capped at 45.5 million tonnes, while high costs elsewhere have limited capacity expansions. Most new projects are concentrated in India and Indonesia. For example, Vedanta's Balco expansion, adding 435kt capacity, is on track for completion in 2025. Similarly, Indonesia's Huatsing Aluminium is set to resume its 220kt capacity project, which paused in late 2024 due to cost pressures. Restarting idle capacities, particularly in regions like the U.S. and Europe, remains an uphill battle due to elevated production costs.

Demand-Side Outlook

Economic recovery initiatives, including interest rate cuts in major economies and stimulus measures in China, are likely to boost aluminium demand. These policies are expected to take effect gradually throughout 2025.

3. Regional Insights

United States:

The U.S. aluminium market is poised for resilience in 2025, supported by steady industrial activity. With reliable imports from Canada ensuring a stable supply chain, premiums in this region are expected to remain high.

Europe:

In Europe, modest economic growth is likely to keep demand subdued. However, stricter environmental policies and potential sanctions on Russian aluminium could tighten supply further, driving premiums higher.

China:

Despite ongoing challenges in the real estate sector, China's aluminium demand is projected to grow by around 2% in 2025. The increasing production of photovoltaic profiles and electric vehicles is fueling demand in transportation and power electronics. With domestic production nearing its regulatory ceiling, stimulus measures are expected to provide additional support to aluminium prices.

4. A Volatile Yet Supported Market

Although alumina prices are expected to ease in 2025, bringing relief to production costs, aluminium prices are unlikely to experience sharp declines. Supply growth faces uncertainty, depending on project timelines and material availability, while demand recovery will vary across regions.

In short, the global aluminium market is set to experience a minor surplus, but factors like high operating costs, fragile supply chains, and steady demand will continue to support prices. External variables, such as geopolitical developments, trade policies, and monetary interventions, are likely to add further complexity and volatility to the market.

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Implications for Businesses

Businesses must adapt to price fluctuations with effective strategies:

• For SMEs and Startups:
  • Secure long-term supply contracts to lock in favourable rates.
  • Diversify suppliers to mitigate risks of geopolitical disruptions.
• For Large Enterprises:
  • Explore recycled aluminium to lower procurement costs and align with ESG goals.

Pro Tip for Businesses

Track LME CSP and futures for better procurement planning. A consistent analysis of price movements allows businesses to secure bulk purchases during price dips, ensuring cost efficiency and supply chain stability.

Conclusion

Understanding the dynamics of aluminium pricing is essential for navigating today’s unpredictable markets. With its role expanding across critical industries, businesses that stay informed will have a competitive edge.