FX.co ★ Aluminum Falls After China Restricts HF Trading

In the UK, aluminum futures dipped below $3,140 per tonne, a decline from the peak reached on January 13th, marking an over three-year high. This drop followed China's imposition of stricter regulations on high-frequency trading. Specifically, Chinese regulators instructed mainland exchanges to eliminate servers operated by high-frequency traders from their data centers, prompting a decrease in metal prices amid recent fluctuations. Despite this, aluminum prices remain bolstered by a tightening supply and production interruptions. China has reiterated its commitment to addressing overcapacity in metal production to mitigate deflationary pressures. It is anticipated that by 2026, the nation will surpass its 45 million-ton production cap, compelling smelters to avoid boosting their output. Additionally, China's initiatives to establish new smelters in Indonesia are encountering delays due to elevated energy costs and regulatory obstacles. Concurrently, high energy expenses, equipment malfunctions, challenges in sourcing bauxite, and geopolitical tensions have temporarily halted operations at key smelters in Iceland, Mozambique, and Australia.