Key Takeaways
- BCA Research reports that aluminum prices will remain supported near term due to tight Chinese primary supply and a notable copper-aluminum price spread.
- Global manufacturing slowdown and declining PMI orders could weaken aluminum demand and pricing pressure in 2026.
- Rising Chinese secondary aluminum output and overseas expansions by Chinese producers may partly offset the capped primary output growth.
Investment research firm BCA Research projects aluminum prices to hold firm in the near term amid constrained Chinese primary aluminum supply and a substantial price premium of copper over aluminum. The firm’s December 2025 report identifies China’s approach to a long-standing annual production cap and substitution incentives as key factors supporting prices. However, deteriorating global manufacturing conditions and potential declines in copper prices could reduce aluminum demand and price strength during 2026.
Chinese Production Limits and Substitution Effects
BCA Research underscores that Chinese primary aluminum production is trending toward the 45 million metric tonne annual capacity ceiling, a limit originally established in 2017 and reinforced under China’s 2025–2027 Action Plan. This restriction effectively ends decades of rapid capacity additions in China, which previously accounted for over 80% of global primary aluminum supply growth. Outside China, there has been no significant acceleration in primary aluminum output, leaving supply-side factors favorable to aluminum prices in the short term.
On the demand front, aluminum benefits from a sizeable discount relative to copper, encouraging end-users—especially in the electrical sector—to substitute aluminum for the more expensive red metal. Aluminum prices have moved upward alongside copper of late, and BCA’s chief commodity strategist, Roukaya Ibrahim, notes that this price gap continues to drive substitution, serving as a near-term tailwind for aluminum demand and prices.
Weakening Demand Outlook for 2026
Looking ahead, BCA Research anticipates a contraction in global manufacturing activity through 2026, with the global Purchasing Managers’ Index (PMI) expected to fall below 50. The firm draws attention to weakness in new orders within the PMI as a warning sign of reduced aluminum consumption by industrial buyers. Should copper prices retreat in tandem with the slowdown, aluminum’s demand advantage could diminish, exacerbating downward pressure on prices.
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Supply dynamics may partly adapt to these challenges. The report points out increased aluminum recycling (secondary production) within China as well as capacity expansions by Chinese producers outside the country. These developments could counterbalance stagnation in Chinese primary aluminum production growth. Moreover, regional electricity cost variations will significantly influence how quickly supply shifts in response to Chinese capacity limits.
Aluminum: Market Outlook
BCA Research’s analysis balances the current tight supply environment from Chinese primary production limits against an anticipated cyclical demand downturn in 2026. Investors and market watchers are advised to closely track global manufacturing data and copper price trends, as these will heavily sway aluminum’s price trajectory. Short-term price resilience is rooted in constrained Chinese capacity and substitution benefits, but looming economic challenges may temper aluminum pricing in the year ahead.
