Goldman Sachs: Base Metals Comment: Higher Aluminium Price Forecast on Supply Disruption
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Goldman Sachs has revised its second-quarter 2026 LME aluminium price forecast upward to $3,450 per ton, aligning with current futures prices, following significant supply disruptions in the Middle East. Emirates Global Aluminium's (EGA) Al Taweelah facility, which has an annual capacity of 1.6 million tons, reportedly sustained major damage from missile and drone attacks. simultaneously, Aluminium Bahrain's (Alba) facility, also boasting 1.6 million tons of annual capacity, suffered an attack with the full extent of the damage still being assessed.
Collectively, these two facilities account for approximately 4% of global primary aluminium supply. Goldman Sachs has consequently removed 1.1 million tons of primary aluminium output from its 2026 balance sheet, representing about 1.5% of global supply. The firm now expects the global primary aluminium market to shift into a deficit of 570,000 tons in 2026, a stark reversal from the previously projected surplus of 550,000 tons. The deficit will be heavily concentrated in the second quarter.
As a result of these disruptions, the average price forecast for 2026 has been increased to $3,200 per ton from $3,100 per ton, while the 2027 forecast has been adjusted to $2,750 per ton. However, the market is expected to return to a substantial surplus of 1.3 million tons in 2027 as new Indonesian supply enters the market. Risks remain skewed to the upside if facility damages are more severe than initially estimated.