Aluminum at Over 3-Week High

Aluminum futures in the UK hovered around $3,310 per tonne, an over three-week high, amid continued supply tightness and declining inventories. The latest escalation in US-Iran hostilities has raised uncertainty over the potential return of aluminum supplies from the Persian Gulf. This came as LME inventories remained near a 36-year low, while SHFE inventories fell 3% from the previous week, underscoring tight conditions in the physical market. Meanwhile, the Alunorte plant in Brazil, the world’s largest alumina refinery outside China, temporarily cut production to 50% of capacity in August, though output was subsequently ramped back up to full capacity following a temporary terminal access agreement with its gas supplier. Some of the supply pressures could also be partly eased by planned capacity restarts and expansion projects among several producers, as well as increased Chinese exports, with shipments from the world’s largest producer rising 18.7% year-on-year in July.

Aluminum futures in the UK were near $3,250 per tonne, trading in a narrow range since declining from an eight-week high of $3,360 on August 11th amid momentary relief of tight supply. Exports of aluminum from China, the world's top producer, surged by 18.7% in the year to July. The country has stepped up exports as muted demand allowed producers to ship metal despite Beijing's output cap of 45 million tons, easing shortages from the Middle East due to the war in Iran. The Alunorte plant in Brazil, the world's largest alumina plant outside of China, was forced to cut operations to half capacity amid the lack of natural gas from its supplier. This added to detriment to its client Norsk Hydro, which already declared two force majeures on aluminum sales after its joint Qatari venture Qatalum plant was forced to shut off production on natural gas shortages. LNG supply from the Middle East, essential for aluminum refining, has been scarce due to tanker blockades from the US and Iran.

Aluminum futures in the UK fell to $3,200 per tonne, easing from an eight-week high of $3,360 reached on August 11, as higher supply from China offset the disruption from the Middle East war. Exports of aluminum from China, the world's top producer, surged by 18.7% in the year to July. The country has stepped up exports as muted demand allowed producers to ship metal despite Beijing's output cap of 45 million tons, easing shortages from the Middle East due to the war in Iran. The Alunorte plant in Brazil, the world's largest alumina plant outside of China, was forced to cut operations to half capacity amid the lack of natural gas from its supplier. This added to detriment to its client Norsk Hydro, which already declared two force majeures on aluminum sales after its joint Qatari venture Qatalum plant was forced to shut off production on natural gas shortages. LNG supply from the Middle East, essential for aluminum refining, has been scarce due to tanker blockades from the US and Iran.