Wood Mackenzie cuts 2026 aluminium deficit forecast as Middle East disruptions ease

By Romel S. Gurky

Wood Mackenzie has reduced its forecast for the global aluminium supply deficit in 2026 to about 900,000 tonnes from an earlier estimate of 2.5 million to 3 million tonnes, saying the metals sector has weathered supply disruptions caused by the Middle East conflict better than initially expected.

"The sector has so far absorbed a significant shock with more composure than most expected," Peter Schmitz, Director of Global Markets Research at Wood Mackenzie, said in the consultancy's mid-year market review.

Wood Mackenzie said the conflict initially threatened a much larger disruption to aluminium supply, while about 32% of global direct reduced iron (DRI) production was also affected, although this represents a relatively small share of global steel output.

Despite the improved aluminium outlook, the consultancy warned that indirect impacts continue to affect metals markets. It said disruptions to around half of global sulphur supply, combined with China's restrictions on sulphuric acid exports, are creating sustained pressure on copper and nickel production, including operations in the Democratic Republic of Congo and Australia.

Wood Mackenzie continues to forecast a slight surplus in the global copper market this year, although tariff related trade flows into the United States are expected to keep prices supported. It also said global steel demand remains weak, while lithium markets have been largely insulated from the disruptions because of existing oversupply and demand concentrated in China.

The consultancy said supply chain resilience built since the COVID-19 pandemic and previous trade disruptions has helped cushion the impact of the conflict, although it warned that rising trade frictions and geopolitical tensions are gradually increasing inflationary pressures, weighing on economic growth and commodity demand.

Wood Mackenzie added that the conflict has intensified discussions over domestic energy security and electrification, with governments increasingly focusing on regional industrial capabilities alongside trade measures such as the European Union's Carbon Border Adjustment Mechanism. The consultancy said the durability of that momentum would depend on broader economic conditions.

Editing by Alexander Ginting