According to APP, Morgan Stanley analysts point out that aluminum supply losses caused by the Middle East conflict could extend into 2026. The bank emphasizes that restarting affected businesses will take up to 12 months, impacting approximately 4% of global supply. Therefore, Morgan Stanley explicitly believes that " aluminum prices face upside risks in 2026." As the physical metals market tightens further, regional premiums in Japan, Europe, and the US are rising significantly relative to the London Metal Exchange benchmark price. However, the bank also adds that a global economic slowdown could weaken downstream demand, thus limiting the upside potential for aluminum prices to some extent.

The current aluminum market is in a state of tight supply-demand balance. According to the latest market data, the price of the main aluminum contract on the London Metal Exchange is approximately $3,469 per ton, an increase of more than 18% since the beginning of the year. As a major global aluminum smelting base, the Middle East's production disruptions are mainly due to unstable energy supplies and blocked logistics channels. If the conflict continues, the recovery period for related smelters will far exceed initial market expectations. The restart process involves not only equipment maintenance but also the re-coordination of electricity, raw materials, and transportation resources, which is the core reason why Morgan Stanley estimates that the recovery time could be as long as 12 months.

The rapid rise in regional premiums further confirms the pressure of physical shortages. In Japan, the aluminum premium rose to $350-353 per tonne in the second quarter, a new 11-year high, representing a significant increase of 79%-81% compared to the first quarter; the European oblig-delivery premium remained high at $480-495 per tonne; and the premium in the US Midwest also broke historical records. These premium increases reflect the additional costs paid by downstream buyers to ensure stable supply, and also amplify regional tightness signals outside of the London benchmark.

However, uncertainties on the demand side cannot be ignored. A significant slowdown in global economic growth will directly impact major aluminum-consuming sectors such as automobiles, construction, packaging, and new energy. In particular, while lightweighting of electric vehicles and grid upgrades provide long-term structural support, short-term macroeconomic pressures may lead to order delays or inventory reductions, thus exerting some downward pressure on prices.

To visually illustrate the potential impact under different scenarios, the following table compares the baseline recovery scenario with the extended interruption scenario:

The core difference between these scenarios lies in the amplifying effect of disruption duration on global supply chains. Investors need to closely monitor developments in the Middle East and the latest growth data from major economies to dynamically assess their risk exposure.
Editor's Summary : The Middle East conflict has become the most significant supply-side disruption factor in the current aluminum market. Morgan Stanley 's analysis clearly reveals the complex interaction between the supply recovery cycle, regional premium transmission, and macroeconomic demand. Ultimately, price trends will depend on the pace of the conflict's evolution, the actual speed of smelting capacity recovery, and the resilience of the global economy. Market participants should maintain a cautious and balanced position management strategy.