Aluminium and copper rally faces 2026 supply crunch

January 23, 2026

LSEG Data & Analytics says aluminium and copper have posted strong gains as supply constraints collide with shifting trade policy and geopolitics, leaving markets vulnerable to short-term swings even as longer-term fundamentals stay supportive into 2026.

For aluminium, LSEG Data & Analytics points to a price lift driven by production caps, tighter environmental standards and an evolving trade backdrop. Aluminium recently reached a three-year high near $2,900 per tonne, with zinc, lead and tin also strengthening.

Trade developments have added fuel. US-China talks have progressed, with the US indicating NVIDIA’s most advanced chips will remain eligible for export to China. China is also set to suspend export controls on rare earth metals and end investigations into US chipmakers, while the US will pause some of the current administration “reciprocal tariffs” on China for another year and halt plans to implement a 100% tariff on Chinese exports that were set to take effect last year, LSEG said.

LSEG Data & Analytics adds that geopolitics is reshaping flows too, with closer Russia-China ties reflected in raw materials trade. China’s aluminium imports from Russia have almost doubled year-on-year, while China’s own export profile is shifting as exports of semi-finished aluminium products fall and imports of primary aluminium rise—signalling a possible move from net exporter towards net importer.

On demand, LSEG Data & Analytics notes structural tailwinds. The International Aluminium Institute expects aluminium demand to rise 40% by 2030, supported by electric vehicles, renewable energy infrastructure and AI-driven data centres that rely on aluminium’s thermal and electrical properties.

Copper is facing its own squeeze. LSEG Data & Analytics highlights that three-month LME copper futures traded above $11,400 per tonne in 2025, with disruptions expected to echo into 2026. Forecast refined copper production growth for 2026 has been cut to 2.2% from 2.8%, while ore grades continue falling 2–3% a year, forcing miners to process more low-grade material.

Tariffs are another wildcard. President Trump announced early last year that tariffs will be applied on copper imports into the US, before plans shifted in late July towards levies on value-added products and possible delays for commodity-grade forms until 2027 onwards. LSEG Data & Analytics says this uncertainty has distorted premiums and inventory behaviour, with scenarios now including a 40,000-tonne production shortfall in 2026 and potential duties up to 50% on refined copper imports.

Looking into 2026, LSEG Data & Analytics expects demand for both metals to remain resilient despite China’s deflation risks and subdued domestic consumption, with decarbonisation and the energy transition underpinning consumption. If trade volatility eases, the incentive to stockpile could fade—helping stabilise, but not eliminating, disruption risk.

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