The global aluminium industry is entering a structurally decisive phase. While global economic growth is slowing, aluminium demand continues to hold up, supported by long-term transition themes such as renewable energy, electric mobility, infrastructure development and the rapid expansion of data centres.
This article distils key insights from a recent aluminium market outlook session, covering the upstream value chain, from bauxite and alumina to primary aluminium, along with price trends, regional dynamics and near-term risks shaping the industry.
Global economic slowdown, but aluminium demand remains resilient
Global GDP growth is projected to slow to around 2.7% during 2025-26, well below historical averages of over 4% in the mid-2000s and around 3% during 2010-2019. Major economies, including the US and China, are clearly losing momentum.
Despite this slowdown, aluminium continues to behave like a pro-growth metal. Global aluminium consumption (primary and secondary combined) is expected to rise from approximately 101-102 million tonnes in 2024 to around 105 million tonnes by 2026.
Demand growth is being driven by structurally strong sectors:
- Solar and renewable energy installations
- Electric and new-energy vehicles
- Infrastructure and non-residential construction
- Rapid growth in data centres
Aluminium’s central role in energy transition, electrification and lightweighting continues to offset broader macroeconomic weakness.
Global bauxite market set to cross 450 million tonnes
Global bauxite production has rebounded strongly since 2021 and is expected to cross the 450 million tonne threshold in 2025, reaching around 451 million tonnes.
Leading bauxite-producing countries include:
- Guinea, now the world’s largest producer
- Australia, ranked second
- China, Brazil and Indonesia
This ranking is expected to remain broadly stable in the near term, although Brazil and Indonesia may interchange positions depending on project timelines.
Indonesia’s bauxite export ban and downstream push
Indonesia’s bauxite export ban, implemented in June 2023, is a strategic policy move aimed at replicating its earlier nickel playbook. The objective is clear: force domestic refining and accelerate downstream aluminium development.
While Indonesia has substantial bauxite reserves, progress has been uneven. Several alumina refinery projects remain stalled or under-financed due to funding constraints, execution delays and investor caution.
India’s Bauxite Strategy Shifts Inward
India has transitioned from being a bauxite exporter to prioritising domestic consumption. Between 2017 and 2023, bauxite exports declined sharply, while alumina imports more than doubled—reflecting rising domestic aluminium demand.
Key players in India’s bauxite and alumina ecosystem include Vedanta, Hindalco, NALCO and Odisha Mining Corporation. Today, around 70–80% of India’s domestically mined bauxite is consumed internally, reinforcing the country’s downstream and value-added focus.
Alumina Market Outlook: Surplus Taking Shape
Global alumina production (metallurgical and chemical grade combined) increased from about 142.7 million tonnes in 2023 to approximately 145.8 million tonnes in 2024 and is expected to reach around 152 million tonnes in 2025.
The alumina market is projected to remain in surplus, with excess supply of around 0.8–1.0 million tonnes in 2025.
This surplus is being driven by:
- New refinery capacity in Indonesia, India and China
- Limited refinery closures despite rising energy costs
Guinea is also signalling ambitions to move downstream, with plans to develop 5-6 alumina refineries by 2030, although execution risks remain high.
China Remains the Structural Anchor of the Aluminium Market
China continues to dominate global aluminium production and remains heavily reliant on imported bauxite due to declining domestic ore quality.
Key China-related trends include:
- Bauxite imports rising more than 30% year-on-year in 2025
- Guinea supplying nearly 80% of China’s imported bauxite
- Installed alumina capacity exceeding 110 million tonnes
Despite global surplus concerns, China is unlikely to cut alumina or aluminium output in a meaningful way. The 45 million tonne capacity cap on primary aluminium limits domestic expansion, pushing Chinese investment overseas rather than forcing production cuts at home.
Primary Aluminium: Production Growth and Regional Expansion
Global primary aluminium production stood at approximately 72.7 million tonnes in 2024 and is forecast to increase to around 73.9 million tonnes in 2025 and 75.7 million tonnes in 2026.
New smelter capacity and restarts are emerging across Indonesia, Vietnam, Malaysia, Brazil, the Middle East and Africa. In contrast, high energy costs continue to threaten smelters in Europe and Australia, where power can account for up to 40% of total production costs.
Aluminium Price Outlook: Supported but Vulnerable
LME aluminium prices strengthened in the second half of 2025, supported by low inventories, smelter disruptions, high European energy costs, stockpiling activity and bullish investor sentiment.
For Q1 2026, aluminium prices are expected to trade in the range of USD 2,800-2,900 per tonne, assuming no major macroeconomic or geopolitical shocks.
Alumina prices, which spiked sharply in late 2024 due to supply disruptions, have since corrected as new refinery capacity came online.
Energy Transition, Carbon Costs and CBAM Pressure
Over the past two decades, the aluminium industry has significantly reduced its dependence on coal, even as global production volumes have more than doubled. However, energy cost volatility remains the single biggest margin risk for producers.
Carbon Border Adjustment Mechanism (CBAM) regulations will increasingly penalise high-carbon aluminium, particularly in European markets. Producers without access to low-carbon power risk margin erosion or shrinking export opportunities.
Key Takeaways for the Aluminium Industry
Aluminium demand growth remains structurally intact despite weaker global GDP growth. Bauxite and alumina markets are moving into surplus territory, while China remains unlikely to cut production. Energy costs and carbon regulations will increasingly define competitiveness, and primary aluminium prices are expected to remain supported in early 2026.
