Goldman Sachs forecasts aluminium market surplus despite Middle East outages

The bank has significantly downgraded its expectations for Middle East output, projecting a shortfall of 660,000 tonnes in 2026 and 1 million tonnes in 2027. Even if geopolitical tensions subside near the Strait of Hormuz, analysts warn that damaged smelter potlines require extensive repairs, delaying a full return to capacity until mid-to-late 2027 for major producers in Bahrain and the UAE.

This supply shock has forced a revision of the global market balance, now anticipating a 720,000-tonne deficit in 2026. However, the brokerage maintains a bearish long-term outlook, driven by rapid industrial expansion in Asia. Goldman Sachs raised its Indonesian production forecasts for 2027 to 2.9 million tonnes, citing accelerated ramp-ups at Adaro, Taijing Morowali, and Juwan Weda Bay. Simultaneously, Chinese smelters continue to operate at high margins, pushing output above the country's 45-million-tonne capacity cap.

While the firm nudged its 2027 average price forecast to $2,950 per tonne, it remains notably more conservative than current market forwards. The bank has rolled its short position on December 2027 LME contracts, betting that the structural supply wave will ultimately outweigh the regional disruptions.