In brief
- Aluminium is extracted from bauxite, which is refined into alumina and turned into metal by electrolysis: a process that consumes a huge amount of electricity. Recycling, by contrast, needs only 5% of that energy.
- In 2025 the world produced about 74 million tonnes of primary aluminium; China alone about 45 million, more than 60% (USGS).
- The world benchmark is the LME Aluminium contract (code AH): primary aluminium with a minimum purity of 99.70%, 25-tonne lots, prompt dates out to 123 months, physical delivery in approved warehouses.
- The price paid in Europe is the LME price plus a regional premium, which for aluminium carries a lot of weight and is affected by duties, logistics and local availability.
- In the FT Mercati archive the highest official price since 1989 is 3,984.5 dollars per tonne, on 7 March 2022; in 2026 the high was 3,855 dollars, on 2 June.
What aluminium is and how it is made
Aluminium is light — about a third of the weight of steel for the same volume — resists corrosion, conducts electricity and heat well and can be recycled endlessly without losing its properties. It is the metal of lightness: wherever weight matters, from cars to aircraft to cans, aluminium replaces steel and copper.
It is produced in three steps. Bauxite, the ore, is mined and refined into alumina (aluminium oxide) by the Bayer process; the alumina is then dissolved in a bath of molten cryolite and turned into metal by electrolysis (the Hall-Héroult process) in the smelters' cells. It takes about two tonnes of alumina to obtain one tonne of aluminium and, above all, a very large amount of electricity: that is why smelters are built where electricity is cheap.
Secondary aluminium, i.e. recycled aluminium, is obtained by remelting scrap and offcuts: according to the International Aluminium Institute it needs only 5% of the energy required to produce primary aluminium. The main LME contract, however, covers primary metal.
Who produces and who uses aluminium
According to the US Geological Survey's Mineral Commodity Summaries 2026, smelters worldwide produced about 74 million tonnes of primary aluminium in 2025. China alone produced about 45 million, more than 60%, and its production capacity is holding at around that level; far behind come India (4.2 million), Russia (3.9), Canada (3.3), the United Arab Emirates (2.7), Bahrain (1.6) and Australia (1.5).
In Europe primary production shrank after the 2022 energy crisis; one of the idled smelters, San Ciprián in Spain, restarted in 2025; the USGS expected it to reach full production by mid-2026. Much of the aluminium consumed in Europe is therefore imported or recycled.
The main uses are transport (cars, commercial vehicles, aircraft, trains), packaging (cans, foil), construction (window frames, façades, structures) and the electrical sector (cables and conductors). In the United States, for example, transport accounts for 36% of consumption, packaging for 24%, construction for 13% and the electrical sector for 9% (USGS).
The LME aluminium contract
The world reference price is set on the London Metal Exchange, on the LME Aluminium contract. What is traded is not “aluminium” in general but a precisely defined metal: quality, shape, lot weight, prompt dates and delivery rules are set by the exchange and are the same for everyone. That is what allows a producer in the Middle East and a fabricator in Italy to refer to the same price.
The main terms of the contract:
| Contract code | AH |
|---|---|
| Metal | high grade primary aluminium |
| Quality | impurities no higher than those of the P1020A designation (North American and International Registration, 2018 revision) or Al99.70 (Chinese standard GB/T 1196-2017): minimum purity 99.70% |
| Shape | ingots, T-bars and sows (large cast blocks) |
| Lot size | 25 tonnes; each warrant 25 t with a tolerance of ±2% |
| Price quotation | US dollars per tonne; also clearable in yen, sterling and euro |
| Prompt dates | daily out to 3 months, weekly from 3 to 6 months, monthly from 7 to 123 months |
| Minimum price fluctuation | 0.50 dollars per tonne on the Ring and LMEselect; 0.01 dollars for carries and on the inter-office market |
| Last trading day | until the close of the first Ring on the day before the prompt date |
| Settlement | physical delivery: warrants for metal of LME-approved brands stored in approved warehouses |
| Trading venues | Ring (open outcry), LMEselect (electronic) and the inter-office telephone market |
Prompt dates are a peculiarity of the LME: a price can be fixed for any business day over the next three months, for every Wednesday out to six months and for the third Wednesday of every month out to ten years. The three-month is the most traded prompt; Cash, two days out, is the one that gives the official price used in supply contracts.
The market is very liquid: according to the LME, more than 268,000 lots of aluminium were traded on average every day in 2025, and delivery relies on a network of around 400 warehouses in 32 locations. Besides the main contract, the LME also lists contracts on aluminium alloys, regional premiums, alumina and used beverage can scrap.
Source: LME, LME Aluminium contract specifications and LME Aluminium page, read on 29 September 2026.
From the LME price to the price paid: premiums and tariffs
The LME price applies to standard metal in an exchange warehouse, often far from the people who use it. For aluminium that actually reaches the plant, a regional premium is paid on top, covering transport, duties, local availability and product shape. The most closely followed benchmarks are the Rotterdam premium in Europe, the Midwest premium in the United States and the Japanese premium (MJP).
For aluminium the premium is no minor detail: it can make up a large part of the final cost and move independently of the London price. In 2025, for example, the United States raised tariffs on aluminium imports to 25% in March and to 50% in June (25% for the United Kingdom), and in August extended them to more than 400 categories of derivative products: according to the USGS, the average price paid in the United States, which includes the Midwest premium, rose by 39% compared with 2024, while the average LME price increased by about 9%.
In Europe the CBAM also plays a part: the EU Carbon Border Adjustment Mechanism, which has covered aluminium imports since 2026. Our CBAM guide explains thresholds, deadlines and costs.
What drives the aluminium price
Energy. No base metal depends on energy as much as aluminium: when electricity becomes more expensive, the least efficient smelters cut or halt production, and supply falls. That is what happened in Europe in 2021-2022, when gas and electricity prices soared.
China. With more than 60% of world production and capacity held at around 45 million tonnes, China determines much of the global balance: its exports of semi-finished products, provincial limits on energy consumption and domestic demand from construction and cars are immediately reflected in the London price.
Raw materials and costs. The prices of bauxite and alumina, electrodes and the other materials used in the cells affect the cost of production, and therefore the price below which smelters stop producing.
Demand, stocks, the dollar and tariffs. Cars, construction and packaging drive consumption; stocks in LME warehouses and the spread between Cash and three-month show how much metal is available; a strong dollar makes aluminium more expensive for buyers in other currencies; tariffs shift trade flows and premiums.
The recent history of the aluminium price
The official LME price (Official Cash, ask side) at key moments of the last twenty years, from the FT Mercati archive, in dollars per tonne:
How the aluminium price is used in contracts
In supply contracts the usual reference is not the price of a single day but an average: the average of the Official Cash prices of the delivery month, or of the previous month, plus the agreed premium. For contracts in euro the conversion rule must also be set: FT Mercati always uses the EUR/USD rate recorded at the LME in the same session as the price.
Companies that want to fix their cost in advance can hedge on the LME by buying or selling futures for the prompt date they need, or by using options, including options on the monthly average. Buyers of semi-finished products should remember that the price of the finished product also depends on processing and on the premium, not just on the metal.
Aluminium on FT Mercati
Every day we publish on the site the official LME aluminium price of the previous session, in dollars and euros, with a chart of recent sessions: that is the LME Aluminium page. Under LME rules, the price of the current session is reserved for users of authorised data vendors.
FT Mercati subscribers follow Cash, three-month and the other prompt dates, closing prices, stocks in LME warehouses and premiums in real time, with history and alerts on the web and in the app: it is what anyone buying and selling aluminium, semi-finished and finished products at the value of the moment needs. The service can be tried for free.
Frequently asked questions
What is the aluminium price today?
On the FT Mercati site you will find, every day, the official LME aluminium price of the previous session, in dollars and euros per tonne. The price of the current session, in real time, is reserved for subscribers: the LME grants it only to users of authorised data vendors.
Why does the aluminium price depend so much on energy?
Because primary aluminium is obtained by electrolysis of alumina, a process that consumes a huge amount of electricity. When energy becomes more expensive the least efficient smelters cut production and supply falls; recycling, by contrast, needs only 5% of that energy.
What is P1020A aluminium?
It is the designation of primary aluminium with a minimum purity of 99.70% and precise limits on impurities, in particular iron and silicon. It is the grade deliverable on the LME contract, together with its Chinese equivalent Al99.70.
How much does an LME aluminium lot weigh?
25 tonnes, with a tolerance of ±2% on the warrant weight. Prompt dates run daily out to three months, weekly out to six months and monthly out to 123 months.
What was the highest aluminium price?
In the FT Mercati archive of official LME prices, which starts in 1989, the highest value is 3,984.5 dollars per tonne, recorded on 7 March 2022. In 2026 the high was 3,855 dollars, on 2 June.
What is the difference between the LME price and the aluminium premium?
The LME price applies to standard metal in an exchange warehouse; the premium is the regional surcharge for having it where it is needed, duty-paid and in the required shape. For aluminium the premium can weigh heavily and moves independently, especially when tariffs change.
Sources
References for this guide. Historical prices come from the FT Mercati archive of official LME prices (Official Cash, ask side).
- LME — LME Aluminium, contract specifications
- LME — LME Aluminium
- USGS — Mineral Commodity Summaries 2026: Aluminum
- International Aluminium Institute — recycling saves 95% of the energy
This guide is market information, not financial or investment advice: for your company's decisions, consult your advisors.