Aluminium Prices Surge Amid Trade Tensions and Supply Constraints

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Aluminium prices have witnessed a sharp increase in 2025, driven by geopolitical tensions, supply chain disruptions, and rising energy costs. The commodity, essential for industries ranging from construction to electric vehicles, is currently trading between $2,450 and $2,600 per ton on the London Metal Exchange, marking a 10–15% rise since January.

Market Drivers Behind the Price Surge

- Renewed US-China tariffs have significantly impacted aluminium imports, leading to price volatility.
- Supply chain disruptions, particularly in China, have constrained global aluminium availability.
- Rising energy costs have increased production expenses, further pushing prices upward.
- Environmental policies in China have led to production curbs, especially in coal-intensive regions.

China’s Role in Aluminium Market Trends

- China accounts for nearly 60% of global aluminium output, making its production policies crucial to price movements.
- A slowdown in China’s manufacturing sector has raised concerns about reduced demand.
- Despite state-backed investments, environmental regulations have tightened production capacity.
- The construction and EV sectors in China continue to drive demand, offsetting declines in real estate and exports.

Global Supply and Demand Outlook

- Aluminium demand has grown at an average annual rate of 2.5% over the past decade, fueled by infrastructure and green technologies.
- Supply growth has been constrained by environmental regulations and geopolitical disruptions.
- Mine supply remains tight due to delays in new project developments and logistical challenges.

Future Price Expectations

- Aluminium prices are expected to remain volatile through the rest of 2025.
- Persistent geopolitical tensions and constrained supply from China will likely keep prices firm.
- Alternative markets such as India and the Middle East may play a larger role in global aluminium trade.
- A potential global recession and high interest rates could dampen demand, exerting downward pressure on prices.

Industry Perspective

Experts believe aluminium’s strategic importance will continue to grow, but the market faces risks from trade policies and economic uncertainty. Investors and manufacturers are closely monitoring developments to navigate price fluctuations effectively.

Sources: Economic Times, MSN, CNBC TV18, Aluminium Magazine.