FX.co ★ Aluminum Holds near 4-Month High

Aluminum futures have stabilized at $2,640 per tonne, closely approaching the four-month peak of $2,670 seen on July 24th. This stability is attributed to anticipated supply constraints and heightened demand from China, the leading consumer and producer. Chinese aluminum production is expected to decelerate as it approaches the annual cap of 45 million tonnes, a limit set to help achieve carbon emission reduction targets. At the same time, demand in Europe is rising, fueled by increased defense investments by EU countries. European factories face restricted supply due to sanctions imposed on Russia, one of the major producers. Furthermore, the positive outlook for Chinese demand has lifted market sentiment for industrial metals. This follows China's announcement of a CNY 1.2 trillion hydroelectric dam, indicating the government's strategy to use infrastructure spending to bolster its economy. This initiative aligns with its commitment to control overcapacity in industrial metals, aiming to alleviate the adverse effects of the ongoing property market crisis on the broader economy.