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Electricity related problems at aluminium smelting facilities in Iceland and Mozambique have intensified concerns over a potential European deficit in duty-free green P1020 aluminium in 2026. Sources told Fastmarkets in the week to Wednesday October 22 that this is a growing worry. Icelandic aluminium smelter Nordural Grundartangi has reduced output by two-thirds. This includes the total shutdown of one of its two potlines due to an electrical equipment failure, operator Century Aluminum said on October 21.
That drop in output adds to pre-existing European concerns over supplies. This is due to growing anxiety over supplies from South32’s Mozal smelter in Mozambique. Operator South32’s unwillingness to commit to a full-year electricity supply agreement for 2026 has led to stalemate with local energy provider Eskom, according to multiple market participants.
Century Aluminum, which counts Glencore as its largest shareholder, said that a timeline for restoring full production at Nordural Grundartangi was not yet available. Furthermore, an update would be provided during Century’s quarterly conference call on November 6.
The Nordural Grundartangi smelter has an annual rated production capacity of 320,000 tonnes of primary aluminium. Thus, the loss of the potline could theoretically disrupt 213,000 tonnes of supplies.
Market participants told Fastmarkets they expected the outage to last at least six months, based on previous potline faults.
“The fact that [Century has] ssued a public statement, shows the situation must be bad,” a European trader said. “Historically, it has taken others [companies] six to nine months [to restore production following a potline fault].”
A second European trader said: “This is very big. If they’ve managed to do a controlled wind down then it’ll take four or five months to ramp back up. However, if it was uncontrolled – meaning they didn’t get the liquid metal out of the pots in time and they have frozen – then it will take far longer than that.”
A third European trader said buyers in Europe would have to start formulating contingency plans.
“[This] news changes things… If the timeframe [to restore production] is over six months, then customers will need to short cover,” the third trader said.
Fastmarkets’ twice-weekly assessment for aluminium P1020A premium, in-whs dp Rotterdam was $275-300 per tonne on Tuesday. This is an increase from $265-285 per tonne a week earlier.
Australian miner South32 threatened to shut down the Mozal aluminium smelter amid ongoing uncertainty over securing affordable power. This is after its supply agreement ends in March 2026, the company said on August 14.
And in its July-September quarterly report on October 20, South32 said: “Negotiations to secure sufficient and affordable electricity for Mozal Aluminium have not progressed to provide confidence the smelter will have access to the required electricity supply when the current agreement expires in March 2026.”
South32 expects Mozal’s aluminium production to be roughly 240,000 tonnes in its 2026 financial year. This runs from July 1, 2025, to June 30, 2026. The estimation is due to fewer pots being in operation. It has decided to stop pot relining in the run-up to March 2026.
“The two most important smelters for Europe are Mozal and Grundartangi,” a fourth European trader said. “We can’t offer [Mozal aluminium, due to the uncertainty surrounding the power agreement] and we can’t [offer aluminium from Nordural Grundartangi].”
Fastmarkets researchers currently forecast a small surplus of 231,000 tonnes of aluminium for 2026. This takes into account the partial mothballing of Mozal’s smelter next year. However, this prediction will need revision in light of the problems at Nordural Grundartangi.
“I have been saying that global aluminium supply is very balanced, with only a small surplus,” Fastmarkets analyst Andy Farida said.
“But taking into account the supplies lost at Century and potentially Mozal, we could see a deficit in 2026,” he added.
Sources told Fastmarkets they were also closely tracking trade talks between the US and Canada. These talks were recently buoyed by reports on Tuesday suggesting a deal could be reached. This might happen at the upcoming Asia-Pacific Economic Cooperation summit in South Korea.
A deal between the two economies, which could include easing the 50% tariff on aluminium imports into the US, might attract tonnages back into the US market. This would reduce the volumes available to European buyers. They have become increasingly reliant on Canadian volumes in 2025.
Sources said the recently climbing P1020 premiums in the US had already begun to attract Canadian tonnes. European premiums have continued to rise in response.
Fastmarkets’ aluminium P1020A premium, ddp Midwest US, was assessed at 80-83 cents per lb on October 21. This is up from 76-78 cents per lb on October 14.
“It’s an unprecedented situation,” a fifth European trader told Fastmarkets. “There are now three [Icelandic, Canadian and Mozambican] ‘green’, high-purity origins that are now uncertain going into next year. Thus, there is going to be a natural risk premium in the European market to reflect that.
“The question now is whether Europe can accept alternative, ‘coal units’ to make up the [aluminium] deficit,” a fifth European trader said.
Although the costs related to the upcoming implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM) is limited to Scope 1 (direct) emissions, many European consumers have already committed to reducing Scope 2 (indirect) emissions. This reduces demand for coal-intensive brands in the market.
LME aluminium prices had climbed to $2,804.50 per tonne, up by 0.84%, compared with the previous day’s close, as of 10.13am on October 22. The market is beginning to price in the outage at the Nordural facility.
The CME aluminium European premium duty-paid futures contract, which is settled based on Fastmarkets’ twice-weekly assessment for aluminium P1020A premium, in-whs dp Rotterdam, remained in a near-term contango over October-December 2025. The December contract settled at $308 per tonne on October 21, up by $3.67 per tonne from October 20.
“Aluminium was just one supply risk away from climbing, and now everyone is panicking,” Farida said. “And the [LME cash] rally could go higher, first to $3,000 per tonne and then to $3,200 per tonne,” he added.
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