Aluminum Slips to Lowest Since February as Supply Outlook Improves

what happened

Trading Economics reported that aluminum futures in the UK were trading near $3,050 per tonne, their lowest level since February. Prices were pressured by a stronger US dollar, reduced concerns about supply disruptions in the Gulf, and expanding production capacity in Indonesia.

Macquarie recently cut its estimate for the global aluminum supply deficit as Middle Eastern smelter restarts advanced faster than anticipated. In late August, Emirates Global Aluminium said that one-quarter of its Al Taweelah smelter in Abu Dhabi had returned to operation while recovery work continued after damage from an Iranian attack in March.

Rio Tinto also reached an agreement to keep its Bell Bay Aluminium smelter in Tasmania running through the end of 2031, adding to expectations of higher supply. The US dollar remained close to an 18-month high, adding pressure to commodities priced in dollars. Expectations for weaker demand in China also weighed to some extent on LME aluminum prices.

why it matters

A faster recovery in production, additional capacity and a firm dollar are creating a less supportive backdrop for aluminum. Prospects for Chinese demand remain another factor for LME prices.

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