Aluminium hits four-year high: the drivers, the risks, and how UK yards should play it

LME three-month aluminium touched USD 3,678.50/t on 16 April 2026, its highest level since the Russia/Ukraine shock of March 2022. That is a 48.55% year-on-year gain and roughly 22% year to date. It is also about USD 395/t shy of the all-time intraday record of USD 4,073.50/t set on 7 March 2022, so "all-time high" is not quite the right framing yet. A serious test of that record is, though, firmly on the table, and the curve structure is telling yards something very specific about how to position.

The curve is backwardated. Read it carefully.

Cash traded as much as USD 94.50/t over the three-month contract on 13 April, the widest backwardation since February and March 2022. By 17 April the cash bid was USD 3,658/t against a three-month bid of USD 3,630/t. The December 2027 contract, however, sat at USD 3,122/t, roughly USD 500 below spot.

Translate that into yard terms: the market is paying a premium for prompt metal right now, and the forward curve is already pricing in a fade. If you are sitting on non-ferrous aluminium, prompt buyers will pay up. If you are trying to lock in forward prices on contract material, you are selling into a materially lower deferred market. That tension is the single most important signal on this rally.

LME stocks reinforce it. Total warrants have fallen from around 529,600t in mid-December 2025 to 391,675t on 17 April, a 23% drawdown in roughly four months. Q1 2026 was a record quarter for LME aluminium trading volumes, with overall average daily volume up about 25% year on year.

What is driving it: two legs

The structural leg was in place before Easter. China's primary output hit 45.02Mt in 2025, officially exceeding its 45Mt production ceiling for the first time. Rusal's annual report, filed on 18 March 2026, flagged that Chinese operating capacity is now at 44.6Mt and "a significant slowdown in the growth of aluminium production is expected in 2026 and beyond." Guinea stripped EGA of its Boké bauxite concession in August 2025 and is now limiting 2026 export volumes. Mozal (560ktpa, Mozambique) went on care and maintenance on 15 March 2026 after failed power negotiations with Eskom. Nordural Grundartangi cut output by two thirds in October 2025. European primary capacity has fallen from 4.8Mt in 2008 to 2.9Mt today. Ewa Manthey at ING put the message plainly in early April: expect aluminium to stay in deficit through 2026.

The acute leg arrived on 28 March 2026, when Iranian strikes during the US-Israel vs Iran conflict damaged EGA's Al Taweelah smelter and Aluminium Bahrain (Alba). Alba declared force majeure. EGA's chief executive Abdulnasser Bin Kalban said Al Taweelah would take up to 12 months to restore primary production. The Strait of Hormuz closed to commercial traffic intermittently through February to mid-April, with LME cash adding 3.8% in a single session on 17 February and another 4% on 13 April. Goldman Sachs responded on 7 April by lifting its Q2 2026 forecast to USD 3,450/t and flipping its 2026 balance from surplus to a 570kt deficit.

UK scrap: prices up, export flows tight

UK yard boards moved with the tape. Indicative April 2026 prices: UBC at £1,360/t (up around £15 on March), commercial pure cuttings £1,300/t, clean cast £1,300/t, old rolled £1,250/t, alloy cuttings including 6063 extrusion £1,200/t, turnings £500/t, foil £300/t. Verify against your letsrecycle and Fastmarkets reads before contract pricing.

ALFED's AIT Outlook 2026 put the structural picture into HMRC numbers. The UK exported over 623,000t of secondary aluminium in 2025 against under 90,000t imported. That gap is why domestic remelters periodically lose material to Indian, Turkish and Pakistani buyers who bid through UK consumer prices. Novelis is trying to close it from one end, with a USD 90m investment at Latchford to double UBC capacity from late 2026. Bridgnorth Aluminium has a further £600,000 going into its refurbished Schmutz line by March 2026. Lochaber keeps running, though the Scottish Parliament Public Audit Committee has taken further evidence on the SIMEC Lochaber guarantee, which now carries an annual Scottish Government exposure range of £14m to £32m.

What could push it higher

CRU's Ross Strachan has flagged a path toward USD 4,000/t if Middle East disruption persists. Macquarie calculates that a 20% curtailment of running Gulf capacity would knock 800,000 to 900,000t off 2026 supply. Wood Mackenzie is modelling a 2026 average of USD 3,500/t and an all-in deficit of up to 4Mt. Strict Chinese enforcement of the 45Mt cap, a dry Yunnan summer, further tariff escalation under the 2 April proclamation (now 50% on Annex I-A and 200% on any Russian-smelted metal), and another European smelter trip all sit on the upside.

What could bring it back

The IMF cut its 2026 global growth forecast to 3.1% on 14 April and warned that an oil-led severe scenario is "a close call for a global recession." ING's Manthey: "At elevated prices, we expect demand destruction, destocking and a partial supply response from China to offset part of the supply shock." Century Aluminum has a 50ktpa restart at Mount Holly due Q2 2026. More than 30Mtpa of new alumina capacity is due online globally 2025 to 2027. And Chinese scrap import liberalisation is pulling secondary material eastward, tightening UK and EU scrap supply but softening Chinese demand for imported primary.

The yard playbook

Six things worth doing now.

1. Use the backwardation. Move 60 to 70% of on-floor non-ferrous aluminium into prompt consumer demand. Deferred contracts are already discounting a USD 500/t fade by late 2027. Holding past the headline peak was brutally unforgiving in 2022, when LME went from USD 3,984/t on 7 March to USD 2,080/t by September.

2. Tighten working capital discipline. A yard turning 500t a month of aluminium has seen stock value rise by roughly £250,000 at current uplifts. Shorten yard-to-consumer turns from 10 to 14 days down to five to seven where the mix allows. Confirm your invoice discounting headroom is in line with new stock values before the bank asks.

3. Widen the clean-to-contaminated spread on the weighbridge. At these prices the gap between clean extrusion and painted gutter, turnings or irony aluminium is worth real money. Novelis Latchford rejects UBC loads above 4% moisture. Train the floor. One missorted bale at £3,000/t LME can wipe a day's gross margin.

4. Declare mid-term values to your underwriter. Average clauses bite hard on rising stock. A 30t curtain-side load of clean aluminium is now £80,000 to £90,000 in transit. Check your goods-in-transit limits, theft extensions, and that your SMDA-compliant perimeter still meets the grading your theft cover assumes.

5. Move to daily price boards on non-ferrous. Intraday moves of 3 to 4% have been routine in April. Time-stamp the board to the 12:55 GMT LME official. Weekly boards will cost you on the way up and again on the way down.

6. Hedge a tranche, not the whole book. Covering 30 to 50% of rolling inventory via LME-linked consumer quotational fixes is a sensible ceiling for a mid-sized yard. Margin-call risk on a violently rising market can consume cash faster than the physical earns it.

Bottom line

This is a supply-led rally sitting on top of a tight structural floor. The 2022 record is in play but not yet broken. Backwardation is telling yards to sell prompt and not fall in love with the position. Keep one eye on Hormuz, one eye on the IMF's growth call, and the weighbridge tidy.

What is your yard seeing on UBC and extrusion volumes this week? Reply and let us know. We will be covering the story as it moves.