Aluminium’s Rally Tests A Tight Physical Market And A Policy-Driven Price Map
Key Points
- Aluminium is pressing multi-month highs as stocks thin and premiums diverge across regions.
- U.S. tariffs and Europe’s carbon border costs are reshaping trade flows and local prices.
- Momentum is strong but stretched, raising the odds of a pause or a sharp, brief pullback.
Aluminium started Monday with prices near $3,158 a metric ton on a retail CFD feed, while the LME three-month benchmark traded around $3,164, swinging roughly between $3,143 and $3,172 on reported volume of 6,720 lots.
In China, the SMM A00 spot reference was near $3,080 a ton, up about 1.4% on the day. The move has been less about a single headline and more about a tightening narrative that keeps getting confirmed.
LME aluminium inventories ended 2025 at 669,140 tons, the lowest since mid-2022. Off-warrant “shadow” stocks also fell sharply, down 56% in 2025 to 159,890 tons. That matters because it reduces the metal available to absorb sudden physical demand.
In the U.S., the story is the premium. Reported all-in aluminium costs climbed above $5,200 a ton after tariffs, with the Midwest premium hitting a record 96 cents per pound, or about $2,116 a ton.
Harbor Aluminum’s Jorge Vazquez described the premium as “way higher than costs justify.” Wittsend’s Gregory Wittbecker flagged doubts about how far it can keep rising, while still pointing to real tightness and fewer discretionary Canadian flows.
China is supportive, but not cleanly bullish. SMM has warned that social inventories could build toward about 780,000 tons by end-January, a seasonal pattern that can cap rallies even when futures are firm.
ING’s 2026 outlook still leans toward deficit conditions, citing China’s capacity cap and power constraints. Technically, the trend is intact but crowded.
Your charts show a 4-hour RSI near 69.6, a daily RSI around 76, and a weekly RSI near 79. Resistance sits around $3,160–$3,172. First support is $3,125–$3,110, then about $3,060 and the $3,000 handle.
Aluminium-linked ETPs exist, but daily flow data is patchy; one visible reference point is a WisdomTree aluminium product with about $66.7 million in assets as of January 8.
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