JP Morgan: Global aluminum inventory in a critical situation, aluminum prices are expected to surpass $4000 in the coming months.

The situation in the US-Iran conflict remains unclear. JPMorgan Chase released a research report stating that global aluminum visible inventory is only 1.9 million tons, enough for only 9 days of demand. In contrast, at the beginning of 2021, global aluminum inventory could cover 20 days of demand. JPMorgan predicts that the London Metal Exchange (LME) aluminum price will break through $4000 per ton in the coming months, with an expected second quarter price of $3800 per ton and an annual average price of $3500 per ton. Currently, the LME aluminum price is hovering around $3500 per ton. The research report pointed out that after the attacks on the Abu Dhabi Al Taweelah smelter and the Bahrain Alba smelter at the end of March, based on the information currently disclosed, the aluminum market has crossed an "irreversible turning point". The Al Taweelah smelter is owned by Emirates Global Aluminium, based in the UAE, and has been confirmed to be shut down, with a repair period lasting up to 12 months, potentially cutting supply by over 1 million tons by 2026. At the same time, out of the 6 production lines at the Alba smelter, only one line is operating, with a capacity utilization rate of around 30%. In addition, the loss of aluminum production in Iran still needs further assessment. As a result, JPMorgan predicts that aluminum production in the Middle East will decline by 36% year-on-year in 2026, reducing by 2.4 million tons. By 2027, production will still be reduced by 950,000 tons compared to before the conflicts.