Goldman cuts aluminum forecast to $2,700 as supply recovery accelerates

Metric	2026	2027
Market balance	-100K deficit	+1.5M surplus
Global inventory	9.3M tonnes	10.8M tonnes
Inventory days	45	51

Goldman Sachs cut its 2027 LME aluminum forecast to $2,700 per tonne, down 8.5% from $2,950, as Middle East supply recovers faster than expected.

"The speed of the Al Taweelah restart has surprised the market, and when combined with Indonesia's structural supply expansion, the 2027 surplus becomes too large to ignore," Goldman Sachs analysts wrote in a July 6 research report.

The bank raised its 2027 global supply forecast by 920,000 tonnes, driven primarily by the accelerated restart of Emirates Global Aluminium's Al Taweelah smelter in the UAE. About 7% of the facility's electrolytic cells have been restarted, with full recovery now expected by the end of the first quarter of 2027 — roughly nine months ahead of the prior timeline. Indonesia is set to add another 1.2 million tonnes of annual capacity by 2027, equivalent to 1.5% of global production.

The 2027 surplus of 1.5 million tonnes would push global inventory to 10.8 million tonnes, or 51 days of consumption, up from 45 days in 2026. That inventory rebuild is expected to compress smelter margins and keep prices under pressure. Goldman maintained its recommendation to short December 2027 LME aluminum and flagged a long copper/short aluminum cross-commodity trade.

Al Taweelah Restart Pulled Forward to Q1 2027

The Al Taweelah facility, which was damaged by a power outage that solidified molten metal inside its electrolytic cells, has made faster-than-expected progress in its recovery. EGA said about 20% of cells have completed the frozen metal removal process — a prerequisite for restart — and the company is pursuing an accelerated timeline. Goldman had previously assumed full recovery by the end of 2027.

Indonesia Adds 1.2 Million Tonnes of Structural Supply

Indonesia's capacity expansion is the larger structural driver behind Goldman's bearish outlook. The country's 2027 incremental output of 1.2 million tonnes represents the single largest source of new supply globally. Combined with the Middle East recovery, global aluminum production is projected to reach 78.9 million tonnes in 2027, up 5.1% year-over-year, while consumption grows at a slower 3.0% to 77.4 million tonnes.

The 1.5-million-tonne surplus would mark the largest global aluminum glut since 2020, when the pandemic crushed demand. For context, the surplus is equivalent to roughly 2% of global consumption — enough to cover nearly two months of Chinese demand. Producers including Alcoa Corp. and Rusal could face margin compression as inventory rebuilds and spot prices trend toward the $2,700 level.

This article is for informational purposes only and does not constitute investment advice.