Will alumina Prices Collapse in 2026 under the Pressure of New Global Production?

According to Bloomberg Intelligence, alumina prices are expected to weaken in 2026, with a projected decline of 14–18% due to supply growth of 2.9% outpacing moderate demand growth of 2.3%. The global deficit will shrink significantly, and the Chinese market will move into surplus for the first time in years as new capacities come online. These changes will increase downward pressure on prices.

1. Average LME and SHFE Prices to Continue Falling in 2026

Average alumina prices on the LME are expected to fall to $320–$340/ton in 2026, 14–18% lower than the 2025 average. The first 11 months of 2025 show an average of $395/ton—a year-on-year decline of 18%—with a 43% drop from July to November as new capacities come online in China and Indonesia. SHFE prices will also fall, losing their premium over LME as China moves into surplus for the first time since 2018. Refineries in Shandong and Guangxi will remain low-cost and profitable despite weaker prices. New capacities in Indonesia and India will produce at $280–$320/ton, establishing a market floor.

2. Global Deficit to Shrink Significantly

The global alumina deficit is expected to shrink significantly in 2026 and move into surplus in 2027, increasing price pressure. Global production will grow by 2.9% due to new capacities in China, India, and Indonesia, while reductions in Australia and project delays in Guinea will not be sufficient to constrain supply. China, which accounted for 61% of global production in the first nine months of 2025, will add 13.4 million tons of new capacity (12.4% of its total capacity), scheduled to come online between late 2025 and 2027.

3. New Capacities in China Will Begin to Impact in 2026

Alumina production in China is expected to grow by 2.8% to 88.6 million tons in 2026, following the addition of 9.4 million tons of new capacity in 2025. Most of the new output comes from Guangxi, Hebei, and Shandong. State-owned Chalco is increasing production to 4 million tons in Guangxi. The deficit in China will be halved in 2025, and in 2026 the market will move into surplus, as demand growth is expected to be only 0.5%. This will encourage leading aluminum producers to expand their own alumina capacities, strengthening supply chain resilience. Sector profits have been declining since March due to falling prices.

4. Rapid Production Growth in India and Indonesia

India and Indonesia are expected to increase their alumina production by 11% and 18% in 2025, reaching 8.6 million tons and 6.0 million tons respectively, raising their combined share of global output from 9.4% to 10.3%. In India, Nalco and Vedanta will expand their capacities and add new facilities. Hindalco announced a $10 billion investment to build 850,000 tons of new capacity. In Indonesia, several large plants will each add 1 million tons by 2028. In the first nine months of 2025, production in India grew by 5.8% to 6.5 million tons, while production in Indonesia surged 37.5% to 4.08 million tons.

5. Obstacles to Production Expansion in Guinea

Guinea plans to build 11 million tons of new alumina capacity with the involvement of SPIC, Chinalco, Alcoa, and others, but these projects are expected to face significant delays. Only SPIC is actively constructing a 1.2 million-ton refinery, which is scheduled to be completed by the end of 2027. The Emirates Global Aluminium refinery with a capacity of 2 million tons has been canceled. The only currently operational refinery — Friguia, owned by RUSAL — will produce 385,000 tons in 2025 and is expected to remain at this level through 2026–2027, unless the Chinalco–Guinea Alumina joint project is approved.

6. Decline in Australian Production Due to Infrastructure Constraints

Australia will maintain its alumina production in 2026 but is expected to reduce output by 5% in 2027 due to infrastructure limitations. Rio Tinto announced a 40% production cut at the Yarwun refinery starting in October 2026 as part of a strategy to extend the life of its assets from 2031 to 2035. Queensland Alumina Ltd may also reduce production unless it makes significant investments in new waste storage facilities to maintain output through 2031.