LME aluminium retreats w-o-w on improving supply prospects

• Slovalco, EGA restart supported global supply recovery
  
  
• Chinese aluminium production continued to increase
  
  

LME aluminium prices declined w-o-w, with the three-month contract settling at $3,100/t in the week ended 3 July 2026, down 4% from $3,232/t in the previous week. Prices opened the week at around $3,166/t, fell to an intra-week low of approximately $3,065/t amid easing supply concerns, before recovering modestly to around $3,085/t and remaining largely range-bound towards the weekend.

Meanwhile, LME aluminium inventories continued their downward trend, declining 2.6% w-o-w to 301,945 t from 310,140 t, reflecting continued tightness in visible exchange stocks despite improving expectations for global primary aluminium supply.

What impacted aluminium prices?

Prices declined w-o-w as concerns over supply disruptions from the Middle East continued to ease following the reopening of the Strait of Hormuz and the faster-than-expected recovery at Emirates Global Aluminium's (EGA) Al Taweelah smelter. The announcement that 89 reduction cells have already been restarted reassured the market that production losses may be less severe than initially feared.

Sentiment weakened further after Norsk Hydro confirmed plans to restart 75,000 tpa of primary aluminium capacity at Slovalco in Slovakia during Q4 2026, signalling a gradual recovery in European supply.

At the same time, higher aluminium production in China, expanding smelting capacity in Indonesia and expectations of improved global metal availability added further pressure on prices. As supply concerns eased, market participants booked profits following the sharp rally witnessed during the Iran-Israel conflict, leading to a broad correction in LME aluminium prices.

Outlook

LME aluminium is expected to remain range-bound in the near term as easing Middle East supply concerns and gradual production recovery at EGA and Slovalco continue to weigh on sentiment. However, declining LME inventories, China's 45 mnt capacity ceiling and a projected global aluminium deficit are expected to limit further downside, keeping prices supported around current levels despite improving supply expectations.