Every quarter, Reuters surveys analysts across the world…
To find out what they think will be the TOP performing base metals on the London Metal Exchange (LME).
What exactly are base metals?
Think copper, lead, zinc, tin, nickel…
These, however, weren’t the top answer. The answer was in fact…
Aluminium!
The role of this metal in the global economy is diverse and critical.
It’s used in drink cans, refrigerators, air cons, cooking utensils…
It’s used in established industries, such as manufacturing and housing construction.
Yet, it also plays a huge role in growth sectors such as the green energy transitions. It can be used in power grid installations as an alternative to copper.
Although up to 40% less efficient than copper, aluminium can conduct electricity long distances. As a result, it has continued to play an important role in energy transfer.
Additionally, thanks to its superior corrosion resistance, aluminium is widely used in solar installations for frames, wires, and support structures.
Corrosion resistance also makes it ideal for offshore wind farms…tower platforms, transformer stations, and turbines.
It’s no wonder why the US and EU classified the metal as a critical in 2024.
The question is…
Why is aluminium the #1 pick for analysts in 2025?
Well, it simply has to do with the typical supply/demand dynamics.
According to consensus, aluminium will swing from an oversupply of 100,000 tons to a deficit of 8,000 tons this year.
2026 is even worse with the deficit expected to grow to a whopping 365,000 tons.
Other than supply constraints, China’s smelter capacity is almost near its cap. By the end of 2024, China’s national output totalled 43.9 million tons, close to the 45 million cap. So, if the world’s largest producer has run out of expansion potential, the rest of the world is going to struggle to fill the output gap.
That’s why analysts forecast aluminium prices to hit around $2,600 in 2025, and around $2,700 in 2026.
Already, aluminium trades at $2,700 right now. So, prices could rise further from here.
After all, on February 10, President Donald Trump imposed 25% tariffs on steel and aluminium imports from all US trade partners – effective 12 March.
The goal is to crackdown on subsidised Chinese metal flooding global markets, which as Trump argues is …”Putting US producers out of business”.
This is not new or surprising. After all, Trump implemented tariffs on aluminium during his first stint as US President.
And guess what happened? Aluminium prices rose!
We could see a similar situation play out that could unlock profits from aluminium producers in 2025. It’s definitely a market to watch.
