FX.co ★ Aluminum Approaches 3-Year High

In September, aluminum futures in the United States ascended to over $3,700 per tonne, approaching the highest levels observed since 2022. This increase can be attributed to a weakened US dollar and ongoing supply disruptions. The 50% tariff imposed on aluminum imports under President Trump's administration led significant Canadian producers to redirect their metal exports away from the US, causing their shipments to account for 78% of Canada's total exports in the second quarter, compared to 95% in the first quarter. In China, production is expected to decelerate, constrained by the country's annual cap of 45 million tons, thereby limiting supply growth from the world's largest aluminum producer. Meanwhile, in Guinea, the Alumina's loss of its mining licenses following the government’s transfer of all mining leases to a newly established state-run enterprise might curtail ore supply to major industry player, Emirates Global Aluminum. Concurrently, the strong demand for physical aluminum has intensified withdrawal requests from global warehouses, resulting in a significant reduction of primary aluminum inventories at the London Metal Exchange, which dropped by nearly 100,000 tonnes to 375,000 tonnes in the first part of the month.