Goldman Sachs Cuts Aluminum Price Forecast by 22% Due to Economic Slowdown

Goldman Sachs has revised its aluminum price forecast, citing a weakening growth outlook. The investment bank has lowered its expectations for aluminum prices due to concerns over the global economic slowdown and reduced demand for the metal. This adjustment reflects the broader economic uncertainties and the potential impact on industrial activities that rely heavily on aluminum.

The decision to downgrade the aluminum price forecast comes at a time when various economic indicators suggest a slowing pace of growth. Officials have noted that if inflation remains high while growth and employment prospects weaken, it will present a challenging balance. This economic environment has led to a more cautious outlook for commodities, including aluminum.

Goldman Sachs now expects aluminum prices to reach a low of $2,000 per metric ton in the third quarter of 2025, down from previous estimates. The bank also predicts that by December 2025, aluminum prices will rebound to $2,300 per metric ton, a significant decrease from the earlier projection of $2,650 per metric ton. This revision is attributed to a downward adjustment in the global demand growth forecast for aluminum, with expected increases of 1.1% in 2025 and 2.3% in 2026, compared to previous estimates of 2.6% and 2.4% respectively. The bank attributes this slowdown to a projected deceleration in global GDP growth.

Aluminum, a lightweight and corrosion-resistant metal, plays a crucial role in various industries, including transportation, packaging, and electronics. The bank's report also predicts a surplus of 580,000 metric tons in the global aluminum market by 2025, a stark contrast to the previously anticipated shortage of 76,000 metric tons. This surplus is expected to help mitigate price increases during the 2025-2026 period.

Despite the downward revision, Goldman Sachs maintains that aluminum prices will rise after 2025, although the increase will be less pronounced than previously estimated. By December 2026, the bank forecasts aluminum prices to be around $2,720 per metric ton, down from the earlier projection of $3,100. For 2027, the average aluminum price is expected to be approximately $2,800 per metric ton, with a projected market shortage of 722,000 metric tons.

The bank's revised outlook underscores the importance of monitoring economic indicators and their potential impact on commodity prices. As the global economy faces headwinds, the demand for aluminum, which is widely used in various industries, is expected to be affected. The adjustment in aluminum price forecasts by Goldman Sachs is a reflection of the current economic climate, where growth prospects are uncertain, and inflation remains a concern. The bank's decision to lower its expectations for aluminum prices is a signal to investors and industry stakeholders to be prepared for potential fluctuations in the metal's value. As the global economy continues to navigate through these challenges, the outlook for aluminum prices will likely remain volatile.