The aluminum market is navigating through a phase of limited supply growth and evolving industrial capacity. As global demand rises, production rates are expected to increase more slowly than in previous years, while new refining projects in Indonesia aim to boost alumina output, essential for aluminum production.
Bank of America forecasts aluminum prices at $3,000/ton in 2025, driven by a modest supply increase of just 1.3%.
Indonesia's new alumina refinery, with a 1 million-ton annual capacity, is set to absorb 3.3 million tons of bauxite and expand production further.
Slower global supply growth and increased production capacity in Indonesia may impact market dynamics and pricing stability.
Bank of America forecasts aluminum prices will trade at $3,000 per ton ($1.36 per pound) next year, citing an anticipated supply growth of only 1.3% year-on-year in 2025. This marks a sharp slowdown compared to the 3.7% average annual growth seen over the past decade, signaling potential tightness in global supply chains.
In Indonesia, President Joko Widodo inaugurated a $941 million smelter-grade alumina refinery operated by Aneka Tambang and Inalum. Located in West Kalimantan, the refinery has a production capacity of 1 million metric tons of alumina per year, utilizing 3.3 million tons of bauxite. The companies plan to expand output by an additional 1 million tons and construct an aluminum plant to enhance downstream processing capabilities.
The combination of slower supply growth and new refining capacities could shift the aluminum market balance in the coming years. While Indonesia’s investments in alumina production strengthen its market position, global supply chain constraints and rising prices are likely to create volatility, challenging businesses reliant on aluminum.
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