Copper rose for a third day and aluminum extended its rebound from a four-month low on July 5, 2026, as expectations for a Federal Reserve interest rate hike decreased. This upward movement in aluminum prices occurred even as analysts like Goldman Sachs anticipate a faster supply recovery, which could lead to a market surplus in the medium to long term.
Goldman Sachs, while acknowledging a near-term aluminum shortage, highlighted that new supply from Indonesia and the eventual recovery of Middle Eastern output could shift the market to a surplus by late 2026 or early 2027. Despite current price increases, Goldman's head of metals, Nicholas Kim, expects aluminum prices to potentially test $4,000 per tonne in the short term, driven by sustained supply impacts from Middle East disruptions. However, he cautioned that this is not a long-term bull market.
The bank revised its 2026 global aluminum deficit forecast to 720,000 tonnes from an earlier 570,000 tonnes, citing slower smelter restarts in West Asia. For 2027, it now forecasts a surplus of 590,000 tonnes, significantly less than its previous projection of $1.3 million tonnes. Goldman Sachs also raised its LME aluminum price forecast for Q3 2026 to $3,300 per tonne from $3,200 per tonne and its average 2027 price view to $2,950 per tonne from $2,750 per tonne. A faster recovery of West Asian capacity could expand the 2027 surplus to around $1.2 million tonnes and pull prices closer to $2,750 per tonne, while a slower restart might sustain prices near $3,250 per tonne.
However, the consensus across the industry suggests that prices will head lower in the long term due to rebounding Middle Eastern supply, elevated Chinese production, and skyrocketing Indonesian output. JPMorgan Chase & Co. has also trimmed its price forecasts, noting that a move to $4,000 per tonne is taking longer than expected due to strong supply responses in Asia and aggressive drawdowns of hidden inventories. Some experts, like Amelia Xiao Fu of Bank of China International, believe a full-blown physical supply freeze has been averted thanks to rerouted imports and increased production from Asia.
