LME aluminium prices remain resilient as the market begins its annual contracting season. Prices are currently trading at $3,275/t (as of 22 September), holding firm above a key upward trend line established since early July. This is a constructive signal for the market despite a strengthening US dollar and tighter Federal Reserve policy. Unusually, supply and inventory constraints are overriding the typical dollar-pressure dynamic, keeping the prices well supported.
European aluminium pricing is being shaped by a confluence of supply-side pressures rather than meaningful incremental demand. Aluminium premiums in Rotterdam have been climbing steadily, with the duty-paid premium reaching $533/t on 23 September, up $10/t in a week. Low physical stocks, restricted prompt availability, vessel delays and rising logistics costs are all pushing European aluminium pricing higher. Vessel disruptions are expected to keep certain inventory categories tight potentially through November, adding further upward pressure on delivered prices.
Duty-paid and duty-unpaid Rotterdam premiums are diverging. Duty-paid premiums are supported by acute physical tightness, while duty-unpaid premiums remain comparatively rangebound. Lower Asian premiums could attract inflows of Asian metal into Europe. The duty-paid/duty-unpaid spread of $79/t (as at 23 September) is not yet wide enough to fully cover import duty and CBAM costs. If it widens further, it could incentivise clearing of duty-unpaid metal, which may moderate the duty-paid market over time.
Looking ahead, the aluminium premium price and broader current aluminium price outlook remain supportive for Q4. Middle Eastern supply disruptions, including limited Gulf smelter restarts and ongoing Strait of Hormuz risks, continue to constrain global supply. Meanwhile, Chinese production is approaching its national capacity cap, limiting the prospect of a significant supply surge. Market participants are positioned cautiously, with lean trading books and limited prompt duty-paid metal available - a combination that keeps the upside risk firmly in play. And with a slew of new supply set to hit the market in 2027, market participants are unlikely to add significant length to their books.
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