Full Breakdown
Aluminum and Copper Prices Surge Amid Supply Constraints
2/12/2026, 9:37:57 PM
Supply Dynamics Driving Price Increases
Aluminum prices have surged as much as 2% to their highest levels in nearly two weeks, primarily driven by the impending closure of the Mozal smelter in Mozambique. South32 Ltd. confirmed plans to mothball the facility next month, despite receiving interest from potential buyers. While the Mozal smelter is relatively small compared to China's extensive aluminum industry, it plays a significant role in supplying the European market. Its closure adds to existing supply constraints affecting key manufacturing sectors globally.
In China, aluminum smelters are approaching a government-imposed cap on production capacity, while U.S. tariffs of 50% on aluminum imports have led to a significant decline in imports and a corresponding increase in prices for manufacturers. Despite sluggish global demand, these tightening supply dynamics have contributed to a 17% price rally in aluminum last year and a further 5.5% increase in 2026.
Copper prices have also seen gains, supported by a tighter supply outlook and a weakening U.S. dollar. Although Chinese buying has decreased ahead of the Lunar New Year, investors remain optimistic about rising demand driven by global manufacturing, the green transition, and advancements in artificial intelligence. The constraints on mine supplies, attributed to declining ore grades, have further fueled this optimism.
Market Reactions and Trends
Refined copper spot trades in China have dropped significantly, falling to 13,400 tons from a peak of over 38,000 tons earlier in February, according to consultancy Mysteel Global. Additionally, open interest and trading volumes on the Shanghai Futures Exchange have reached their lowest levels since November, indicating a shift in market dynamics.
Despite the decrease in Chinese demand, overseas risk appetite persists, as noted by Wu Kunjin, head of base metals research at Minmetals Futures Co. The weaker U.S. dollar has made commodities more affordable in other currencies, contributing to the ongoing rally in metal prices.
Criticism & Opposition
While the price increases are welcomed by some investors, critics point to the potential negative impacts on manufacturing costs and consumer prices. The high tariffs on aluminum imports in the U.S. have been particularly contentious, as they may exacerbate supply issues and lead to higher costs for manufacturers reliant on imported materials.
Official Statements & Responses
South32 Ltd. has reiterated its commitment to closing the Mozal smelter, emphasizing the need to address supply constraints in the market. The company has acknowledged the inbound interest in the asset but remains focused on its operational strategy.
What's Next
As the market adjusts to these supply constraints, stakeholders will be closely monitoring the impact of the Mozal smelter's closure and the ongoing effects of U.S. tariffs on aluminum imports. Future trends in global manufacturing demand and the green transition will also be critical in shaping the outlook for aluminum and copper prices.
