Since the beginning of the year, aluminum prices have increased by 13% and are now trading at 2,850 per ton, which is close to three-year highs. However, market participants are divided on the future price dynamics.
Reasons for rising prices
Prices have risen in the last few months due to a number of reasons:
• Supply disruptions from the United States as a result of the fire at the Novelis plant, which will affect about 40% of the supply of aluminum sheets to the American auto industry;
• Reduction in inventories on the London Metal Exchange (LME);
• An additional factor supporting prices was that production in China (60% of global production) was significantly closer to the government-set limit of 45 million tons. In 2024, China produced 43.4 million tons of aluminum, and in 9M 2025 - 34 million tons or 45.3 million tons in annual terms.
Further forecasts
According to Rusal, during the 1H In 2025, the market was close to balance: global demand for primary aluminum increased by 3.6% y/y to 36.7 million tons, and production increased by 2.1% y/y to 36.4 million tons. But market participants disagree on the further dynamics of supply and demand.
Bulls believe that the aluminum market is moving towards a structural deficit thanks to steady growth in demand from the electric vehicle, renewable energy sectors and investments in energy infrastructure (primarily in China), which, given the limited production potential in China, will support prices. However, Bears believe that Chinese companies will find a way to increase production. For example, some of them have already started building plants in Indonesia to circumvent the restrictions.
Thus, against the backdrop of the reasons described above, analysts allow an increase in aluminum prices to 3,000/t, but further prospects remain uncertain.
Outlook on Rusal
Despite the rise in aluminum prices in the past few months, we still maintain a cautious view on Rusal due to its high debt burden (at the end 1H 2025 Net debt/EBITDA' LTM ratio amounted to 5.1x), growth in interest expenses (232% for 1H 2025) and capital costs (38% y/y for 1H 2025).
In our opinion, in order for Rusal’s financial profile to significantly improve, it is necessary not only stable aluminum prices above 3,000 per year. ton, but also a weakening of the ruble exchange rate to 90-100 rubles. per dollar.
