Aluminum Fundamentals and Market Outlook

The recent, sharp selloff in aluminum prices was driven by liquidity-related financial flows and speculative position unwinding rather than deteriorating fundamentals. SEB maintains a bullish outlook, expecting a rebound due to structural supply constraints and record-low inventories in non-China markets.

Key Takeaways

• 1.Recent sharp selloff in aluminum prices was driven by speculative position unwinding and broader financial liquidity trends rather than a change in fundamentals.
• 2.Supply fundamentals remain bullish due to persistent supply disruptions in the Strait of Hormuz (SoH) affecting 17% of non-China primary supply.
• 3.European aluminum inventories are effectively depleted, creating a volatile market prone to rapid price spikes (backwardation) when supply chain delays occur.

Table of Contents

• Aluminum - A brutally hard selloff. Fundamentals still bullish. Rebound likely
• The aluminum price versus liquidity sensitive instruments
• A larger liquidity slowdown at hand?
• Global aluminum inventories
• Global aluminum inventories are mostly ok in total
• Aluminum prices around the world including geographical premiums

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