1. The turning point of the global aluminium industry:
Where is the supply growth “stuck”?
If the core variable of global aluminium prices over the past decade has been on the demand side, then the most important thing to watch in the next five years is: supply. Especially in 2026, global electrolytic aluminium supply growth is likely to be only 1.9%, a very low level, suggesting that the aluminium industry may enter an unprecedented cycle of tight supply balance.
Why is the growth rate of global supply so low? The reason is not demand, nor cost, but structural “bottlenecks” on the supply side: China’s capacity has peaked and the space for growth has been locked by policies; European capacity has been permanently reshaped by the energy crisis and is difficult to recover; U.S. power shortages and high electricity prices have led to a five-year decline in production; Almost all the increments are bet on Indonesia, but its power policy has blocked capacity release;
The resumption of projects has been slow in Europe and the United States, and the reality is far worse than earlier market expectations. In other words: The global electrolytic aluminum industry is moving from an “incremental logic” to a “constraint logic”.
Next, we will break down the real growth space of global supply in the next three to five years from four lines: the global pattern, the expansion in Indonesia, the expansion in other countries, and the resumption of production in Europe and the United States.
2. China’s capacity peaks: The world enters a new stage of “no China’s increase”
More than half of the growth in global electrolytic aluminum production over the past two decades has come from China. But now that era is coming to an end.
China’s capacity ceiling is approaching its limit. Under energy consumption control and carbon emission constraints, China’s total electrolytic aluminum capacity has been controlled at 45 million tons for a long time, and the current operating capacity is approaching the upper limit. This means that China will find it difficult to provide more effective increments in the future, and its contribution to global supply is approaching zero. In a context where global supply growth is only 1.9%, “China not increasing” itself is a key factor in determining expectations of global shortages.
3. Overseas Supply:
Since China is not increasing, almost all of the global increments must come from overseas. But what about overseas? Europe, electricity prices, America, aging equipment, limited expansion in the Middle East and India… None of them is easy.
(1) Europe: The energy crisis leaves a long scar
The energy crisis, though over, is far from over. Electricity prices (including taxes) rose 63.8% in Europe during 2021-2022 and a large number of electrolytic aluminum plants were forced to shut down or cut production.
Europe’s electrolytic output in 2021:8.157 million tons fell to: 7.508 million tons (-7.96%) in 2022and still only: 7.0.0 million tons in 2024, still not back to pre-crisis levels. Europe’s problems are not short-term but structural: High energy costs, unstable power supply and a high share of renewable energy have led to volatility. Electrolytic aluminium is a typical “24-hour non-stop” industry, and power instability means no expansion or even no maintenance of normal operation.
In other words: European capacity is more likely to “fall less” over the next three years rather than “recover or grow”.
(2) US: Power crunch, output falling for five consecutive years
The US electrolytic aluminum industry is going through a long recession:
output has fallen for five consecutive years since 2020;
Down 3.7%, 10.7% and 13.8% year-on-year from 2022 to 2024 respectively;
AI data center power surges further squeeze industrial power consumption;
Old equipment and high labor costs make it more difficult to resume production.
The U.S. is characterized by extremely high electricity prices, but also extremely high premiums – aluminium in the Midwestern United States has a premium of more than 50%, providing some stimulus for the resumption of production. But the final outcome still depends on the electricity contract, which is exactly what the US is lacking the most.
(3) Growth drivers: Middle East and India maintain steady expansion Effective growth outside China over the past five years has mainly come from the Middle East and India:
Middle East 2024 New output: 137,000 tons
India 2024 New output: 83,000 tons
CAGR of production in both regions 2021-2024: About 2.1%
Growth is sustainable but by no means “flooding the market”. This is a steady and moderate growth that cannot change the overall tight structure of global supply. The real big increase comes from – Indonesia.
4. Indonesia’s electrolytic aluminum:
If the story of global electrolytic aluminum supply over the next three years can only be written in one country, it must be Indonesia. Why did Indonesia suddenly become the focus of the world? Because it has two globally scarce conditions:
1. Abundant bauxite resources and policy-driven localization of smelting;
2. Energy prices are low (but are becoming stricter).
As of October 2025: Indonesia operating capacity: 775,000 tons, under-construction capacity: 2.125 million tons, total planned capacity: 6.6 million tons, which means Indonesia has the potential to become the “second Middle East” or even the new “global aluminium smelting center” in the future.
Indonesia production growth rhythm (forecast), we expect Indonesia electrolytic aluminum production:
2025: 815,000 tons
2026:1.5 million tons
2027: 2.5 million tons
2028: 3.2 million tons
2024-2028 production CAGR as high as 57.8%. By 2028, its global share will rise from 1.7% to 9.1%, making it a true “incremental engine”. But here comes the question: Can these projects really be implemented smoothly? The answer is not entirely optimistic.
Global aluminum supply enters an era of “long-term tightness”
When you add up all the increments and constraints, you’ll see a clear trend: the growth rate of global electrolytic aluminium supply will remain persistently low over the next three years and may be only 1.9% in 2026. The reasons can be summed up in four points:
China is no longer growing, and the world is losing its main source of growth;
Indonesia, though strong, is constrained by coal-burning restrictions and uncertainties in electricity policy;
There are huge obstacles to resumption in Europe and the United States, making it difficult to restore production on a large scale;
Other countries have limited increments and are unlikely to shake up the global landscape.
Therefore: The aluminium industry will enter a tight balance that lasts for several years; The bottom of aluminium prices is expected to rise; Europe and the United States have long been uncompetitive; Indonesia, the Middle East and India will become the new global supply centers; The geographical center of gravity of the global aluminium supply chain is undergoing a “century shift”.
If 2010-2020 is called the “decade of China’s capacity expansion”, then 2025-2035 could be the “Indonesia – Middle East – India tripole era”.
What will be more crucial for aluminium prices in the future is not demand but supply, as supply-side constraints have shifted from short-term events to long-term structural ones.