Aluminium tight near-term on West Asia outages: Goldman

West Asia supply losses will hold into 2027, tighter than Goldman Sachs initially expected. The bank cut its output forecast for the region by 660,000 tonnes in 2026 and by 1 million tonnes in 2027. Bahrain production won't return to pre-conflict levels until mid-2027; the UAE will take until the end of that year.

Goldman now expects a 720,000-tonne global deficit in 2026. In 2027 the market swings to a 590,000-tonne surplus. That compares with its prior view of a 570,000-tonne deficit and a 1.3-million-tonne surplus.

"This is the tale of two supply shocks," the report said. "A near-term West Asia shock that tightens the 2026/2027 balance and supports near-term prices, set against a structural China-backed supply wave, led by Indonesia, that increasingly offsets the disruption over time and keeps us bearish further out."

Even if the Strait of Hormuz reopens under the announced interim deal, smelters can't restart at full capacity. Damaged potlines need repairs and curtailed capacity must be restarted gradually, the bank said. That pushes the recovery timeline back roughly six months from Goldman's earlier assumption.

The structural offset is already visible. Indonesian primary aluminium output is up about 89% year-over-year year-to-date. Goldman raised its 2026 Indonesian forecast to 1.7 million tonnes from 1.6 million, and its 2027 forecast to 2.9 million from 2.5 million, citing faster ramps at Adaro, Taijing Morowali and Juwan Weda Bay. For China, the bank lifted 2026 production to 45.6 million tonnes and 2027 to 46.3 million tonnes, as strong margins support restarts and overproduction above the official 45-million-tonne capacity cap.

Goldman nudged its price forecasts higher. Q3 2026 LME aluminium is now seen at $3,300 a tonne from $3,200. The 2027 average moves to $2,950 from $2,750. Forwards are higher: $3,400 for December 2026 and $3,250 for December 2027. The bank closed its short on the December 2026 contract and rolled to December 2027, where "our forecast sits furthest below the forward and best expresses our structural surplus view."

Two risk scenarios bracket the base case. A slower West Asia restart would keep 2027 fairly balanced around $3,250. A faster restart could lift the surplus toward 1.2 million tonnes and push prices closer to $2,750.

What would confirm the deficit view: Indonesian ramp rates stay below Goldman's 1.7Mt forecast and Chinese monthly output holds near the 45Mt cap. What would weaken it: West Asia potlines come back faster than mid-2027 or demand softens globally.

The full GS stock page and commodities analysis on AlphaScala track the bank's commodity calls and the underlying supply-demand drivers.