Aluminum prices have breached a significant threshold, climbing above US$3,000 a ton for the first time since 2022. This milestone, reached on the London Metal Exchange, marks the metal's highest level in more than three years and is driven by a tightening global supply outlook coupled with sustained demand expectations.
Supply Constraints Fuel the Rally
The surge is primarily attributed to two major supply-side pressures. First, a cap on smelting capacity in China, the world's largest producer, is limiting output. Second, production in Europe remains constrained by persistently high electricity prices, which make energy-intensive aluminum smelting less economical. These factors have collectively chipped away at global stockpiles of the metal.
On the demand side, sectors like construction and renewable energy continue to show robust need for the lightweight metal. This combination propelled aluminum futures to a 17 per cent gain in 2025, their strongest annual performance since 2021.
Base Metals Broadly Advance
Aluminum is not alone in its ascent. The broader base metals complex is experiencing significant momentum. Copper, which recorded its biggest annual gain since 2009 last year, resumed its climb. Its rally has been fueled by a tight supply picture following mining accidents in key producing nations like Indonesia, Chile, and the Democratic Republic of the Congo in 2025.
Nickel also saw a sharp increase after PT Vale Indonesia temporarily halted mining operations. The pause was due to a delayed approval of a work plan from local authorities, though the company expects the approval soon and stated the delay is unlikely to impact long-term operations. Traders remain sensitive to supply news after Indonesia announced plans to cut output this year.
Market Snapshot and Context
As of 5:31 p.m. Singapore time on January 2, key metals traded as follows:
- Aluminum rose 0.4% to US$3,008.00 per ton.
- Copper gained 0.5% to US$12,487.00 per ton.
- Nickel climbed 1.2% to US$16,845.00 per ton.
Meanwhile, iron ore futures in Singapore advanced slightly, with Chinese markets closed for a public holiday.
This widespread strength in industrial metals underscores a market betting on both near-term supply limitations and long-term structural demand from global electrification and green energy transitions. For Canadian industries, from manufacturing to aerospace, these rising input costs will be a critical factor to watch in the coming months.
