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| Low carbon Green Aluminium |
The global supply of low-carbon green aluminium faces mounting pressure as electricity disruptions at key smelting facilities in Iceland and Mozambique signal a potential deficit for Europe in 2026. Specifically, Century Aluminum’s Nordic smelter, Nordural Grundartangi in Iceland, has reduced output by two-thirds due to a significant electrical failure, heightening concerns over the future supply of green P1020 aluminium.
Century Aluminum Outage Deepens Green Aluminium Deficit
Century Aluminum, one of the world's key producers, confirmed a major production loss at its Nordural smelter, where a critical potline has been completely shut down. The smelter, located in Iceland, has an annual rated production capacity of 320,000 tonnes, meaning the shutdown could result in a supply shortfall of approximately 213,000 tonnes of aluminium. Sources in the market predict that it will take at least six months, if not longer, to restore full production.
A critical factor exacerbating the crisis is the uncertainty surrounding energy supplies at the Mozal aluminium smelter in Mozambique, operated by South32. With the existing electricity supply agreement set to expire in March 2026, negotiations have stalled, further increasing supply uncertainties for Europe.
Europe Faces Growing Premiums Amid Shortage of Low-Carbon Aluminium
As a result of the Nordural Grundartangi outage and the looming power issues at Mozal, the market for green aluminium in Europe has tightened significantly. The premiums for aluminium P1020A in Europe have risen, with premiums for Rotterdam delivery increasing from $265-285 per tonne last week to $275-300 per tonne.
With reduced supply from both Iceland and Mozambique, European traders are now grappling with a situation where the key sources of green aluminium are no longer reliable. This shortage of low-carbon aluminium is expected to push prices even higher, with premiums likely to keep rising in the near term.
Global Supply Risks and Potential Shifts in Trade Dynamics
In addition to production disruptions, trade shifts could further exacerbate the European aluminium supply deficit. Reports have indicated that discussions between the U.S. and Canada may lead to a deal on easing tariffs on aluminium imports. This could result in more aluminium being redirected to the U.S., reducing the volume available for European buyers.
Amid rising premiums in both Europe and the U.S., there is growing concern that Europe may have to rely on higher-polluting, "coal-intensive" aluminium alternatives to fill the gap. This shift comes at a time when the European Union is intensifying its focus on reducing Scope 2 emissions, further complicating the situation.
ScrapInsight Commentary
The European aluminium market is facing a severe supply crisis as key smelting operations in Iceland and Mozambique experience disruptions. As concerns over energy availability grow, the EU's dependence on low-carbon aluminium is putting further pressure on global supply chains. With rising premiums, the market may see prices continue to climb, potentially pushing companies to turn to coal-based production alternatives.
