Citi Aluminium Outlook: Electricity in the Form of Metal - Sleepwalking Into the Biggest Deficits in Over 20 Years - January 2026 Update

Citi maintains a bullish medium-to-long-term outlook on aluminium, strongly advising consumers to hedge at current levels across a one-to-five-year horizon. Despite aluminium prices rising 30% since the initial structural bullish call in June 2025, current levels remain insufficient to incentivize the necessary medium-term supply growth. Citi estimates that prices must credibly and sustainably exceed $3,500 per tonne to stimulate the more than 10 million tonnes of additional supply required by 2030. Without adequate supply growth, the market may ultimately clear through demand destruction, potentially driving prices toward $4,000 per tonne.

The report asserts that aluminium is entering its most severe supply deficit in over two decades. Primary supply faces structural constraints from intensifying competition for electricity and China's production capacity cap. Meanwhile, emerging demand drivers including humanoid robots, artificial intelligence, data centers, and drones are accelerating consumption growth. Citi argues that aluminium faces a significantly higher probability of physical shortage, inventory depletion, and spot premiums compared to copper, given that scrap aluminium responds far less elastically to elevated prices. Chinese primary aluminium output growth is decelerating sharply toward zero by 2027. Even projected Indonesian capacity additions of approximately 700,000 tonnes annually fall dramatically short of the required 2-3 million tonnes, leaving an unbridgeable global gap.