Despite a broad rise in aluminium production across most of the world's major regions in May, the global market has not managed to climb out of deficit, according to ING strategists Warren Patterson and Ewa Manthey. The team says the supply destruction caused by Middle East conflict is simply too large for the current output recovery to absorb, and they continue to project a sizeable shortfall for the full year.
What the May Output Numbers Show
Data released by the International Aluminium Institute (IAI) showed that global primary aluminium output grew 3.5% month-on-month in May, reaching 6.2 million tonnes. The gains were spread across most major producing regions, with Europe and Asia excluding China both recording higher output during the month, alongside China. The Gulf region was a stark exception: production there remained more than 35% below the levels recorded a year ago, a direct consequence of ongoing supply disruptions linked to the Iran conflict.
Middle East Conflict Has Taken an Estimated 3 Million Tonnes Off the Market
The supply disruptions tied to the Middle East conflict have effectively removed an estimated 3 million tonnes of aluminium production capacity from the global market. That is a loss large enough to more than offset the production gains being made elsewhere. The ING team acknowledges that China, Europe and Asia ex-China are all trending upward, but none of those contributions are sufficient to plug the hole left by the disrupted Middle East supply.
Smelter Restarts Are Slow, Keeping Supply Constrained
One reason Patterson and Manthey are not expecting a quick supply recovery is the nature of aluminium smelting itself. Once a smelter has been idled, bringing it back into operation is a lengthy and technically demanding process. Even if the geopolitical conditions in the Middle East were to improve, it would still take considerable time before that lost capacity returned to the market. This built-in delay keeps the supply side under pressure regardless of encouraging output figures coming from other regions.
ING Sticks With a 1.8 Million Tonne Global Deficit Forecast
Taking the full picture into account, the ING team continues to forecast a global aluminium deficit of around 1.8 million tonnes for the current year. The forecast is grounded in both the scale of capacity that has been lost and the slow pace at which it is realistically expected to return. May's output data offers some encouragement, but the underlying market imbalance is expected to persist through the remainder of the year.
