Indonesia seen as top ex-China aluminum capacity growth driver in 2026: SMM
Saturday, June 6 2026 - 09:37 AM WIB
By Dominikus
Indonesia is expected to become the largest source of new primary aluminum capacity outside China in 2026, with around 2.5 million tons of new operating capacity projected to come online this year, Sibyl Yang, senior aluminum analyst at Shanghai Metals Market (SMM), said at the Indonesia Critical Minerals 2026 Aluminum Forum in Jakarta on Friday.
Yang said the projected addition would mark a sharp increase from around 870,000 tons in 2025, making Indonesia the most important incremental contributor to global primary aluminum supply this year.
Indonesia’s role is expected to continue in 2027, with capacity projected to rise from 2.5 million tons to 3.6 million tons, adding another 1 million tons and strengthening the country’s position as a major global supply hub.
Other major contributors to new primary aluminum capacity outside China in 2027 are expected to include Angola, India and Saudi Arabia, Yang said.
Angola’s capacity is projected to rise from 120,000 tons to 320,000 tons, while Saudi Arabia’s capacity is expected to increase from 800,000 tons to 1.3 million tons.
Yang said the global aluminum market is expected to remain in deficit in 2026, supported by Middle East supply disruption, logistics bottlenecks and production cuts, before shifting into varying degrees of surplus in 2027 as capacity recovers and new projects are commissioned.
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She said escalating geopolitical conflict in the Middle East had disrupted the global aluminum supply chain, including through congestion in the Strait of Hormuz, higher marine insurance premiums and delays in the delivery of raw materials such as alumina and carbon blocks.
Several smelters were forced to suspend or reduce output, with affected capacity reaching at least 2.4 million tons per year, creating a physical shortage outside China, she said.
The disruption has also pushed up global aluminum premiums. Japan’s quarterly MJP premium rose from US$86 per ton in the fourth quarter of 2025 to US$351.5 per ton in the second quarter of 2026, an increase of around US$265.5 per ton.
For the second half of 2026, SMM estimated LME aluminum prices in one scenario at US$3,500 to US$4,200 per ton, with a central price of US$3,850 per ton.
Yang said LME aluminum prices have greater upside flexibility in 2026, while domestic Chinese prices are expected to remain more subdued due to higher inventories.
She said the market logic is expected to shift in 2027 from a shortage premium to surplus pressure, as short-term supply shocks caused by geopolitical risks are gradually offset by long-term global capacity expansion.
Editing by Reiner Simanjuntak