Summary of Aluminium Industry Conference Call Industry Overview - The aluminium industry is facing a significant shift as China's aluminium production reaches its capacity cap of 45 million tonnes per annum (mtpa), limiting further growth and creating better conditions for smelter margins [2][14][10] - Supply outages in Europe and increasing power demands from other sectors, particularly AI, are complicating the operational landscape for aluminium smelters [3][24][10] Key Points Supply Dynamics - China's aluminium output is currently at 45.2 million tonnes year-to-date, indicating limited room for further growth [14][16] - Net exports from China have decreased by approximately 700,000 tonnes year-to-date, contributing to a tighter market [2][14] - Indonesia's aluminium output is projected to grow significantly, with estimates suggesting an increase from around 500,000 tonnes in 2024 to 3.6 million tonnes by 2030, but this growth may not be sufficient to offset the overall market deficit [39][41] Market Deficit Projections - The aluminium market is expected to be in a deficit in 2026, with projections indicating a shortfall of 600,000 tonnes, which could increase to nearly 800,000 tonnes when factoring in outages from Century's Iceland smelter [58][62] - The potential shutdown of the Mozal smelter in March 2026 adds to the risk of a larger deficit [11][34] Price Outlook - Aluminium prices are forecasted to average $2,750 per tonne in 2026, above the consensus estimate of $2,620 per tonne, with potential for prices to breach $3,000 per tonne under current market conditions [5][62][63] - A bullish scenario could see prices rise to $3,300 per tonne, contingent on further supply disruptions [5][63] Power Supply Challenges - Aluminium smelting is highly electricity-intensive, requiring 14-16 MWh per tonne, which is increasingly competing with rising power demands from AI and other sectors [3][24] - Smelters are struggling to secure long-term power contracts at competitive rates, with the US Aluminium Association indicating a need for contracts around $40/MWh, while some tech companies are securing contracts at $100+/MWh [3][24][33] Regional Insights - In Europe, the restart of idled smelting capacity is becoming more challenging, with significant risks that some capacity may remain offline due to difficulties in securing power contracts [25][29] - The US market has seen limited restarts of idled capacity despite high premiums, with only Century Aluminium announcing a partial restart [31][37] Demand Trends - China's aluminium demand is projected to rise by 3% in 2025, driven by investments in grid infrastructure, solar installations, and electric vehicles, but growth is expected to slow to 2% in 2026 [47][48] - The slowdown in solar installations, which currently account for about 10% of China's aluminium demand, poses a risk to future demand growth [48] Additional Insights - The competition for electricity and the challenges in securing long-term contracts are critical factors that could impact the operational viability of smelters globally [3][24] - The aluminium market's historical tendency to trade close to its cost curve may change as supply tightens, potentially leading to improved smelter margins [15][62] This summary encapsulates the key insights and projections regarding the aluminium industry as discussed in the conference call, highlighting the interplay between supply constraints, demand trends, and pricing dynamics.