Aluminium prices on the LME have risen above $2,900 per tonne, marking an increase of over 13% this year. This places Aluminium as the third-best performer, following Copper and Tin. The surge in prices is driven by expected supply cuts in China and a positive mood in the market due to easing tensions between the US and China. A trade agreement between the two countries has reduced risks for industrial metals. China’s Aluminium production is close to its limit of 45 million tonnes, set in 2017 to control oversupply and reduce emissions. If this cap remains, the global Aluminium market is likely to stay balanced next year. This will affect exports and keep non-Chinese markets tight. In Europe and the US, not many Aluminium plants have restarted due to difficulties in securing affordable long-term energy contracts. In contrast, Aluminium exports from Indonesia are rapidly increasing, which could influence prices next year. Additionally, a broader rally in Copper has helped lift Aluminium prices, with the Copper-Aluminium price ratio nearing record levels. This trend suggests that more industries may switch from Copper to Aluminium. Currently, Aluminium prices are trading above $2,900 per tonne, reflecting a gain of over 13% since the start of 2025. Recently, prices have tested the $2,950 level, backed by high trading volumes on the LME. Open interest in Aluminium futures has grown by 8% in the last month, indicating that traders are confident in this upward trend. The main factor behind the strong prices is the supply situation in China, which is approaching its 45 million tonne production cap. Recent data from October 2025 shows annualized production at 44.8 million tonnes, leaving little room for additional output. This tightens the global market by limiting China’s ability to export surplus metal—an important shift from previous years. We must also keep an eye on the Copper market, which significantly supports Aluminium prices. Copper recently reached a record high of over $12,000 per tonne in 2025. The price ratio between Copper and Aluminium is now around 4.1, much higher than its historical average. This makes Aluminium a more affordable option, and we anticipate that industrial users will increasingly replace Copper with Aluminium in areas like electrical cabling. Given this positive outlook, there are opportunities in the options market for the upcoming weeks. Traders may consider buying call options with strike prices around $3,000 to $3,100 for January and February 2026 expirations. This strategy allows traders to benefit from potential price increases while minimizing the risks of a sudden drop. However, we should remain alert for any market changes. The rising Aluminium exports from Indonesia could pose challenges in 2026, so any acceleration in that area might impact prices next year. For now, traders should closely monitor LME warehouse inventory levels, which are currently at historic lows of under 300,000 tonnes, as this could signal shifts in supply.

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