FX.co ★ Aluminum Eases from 3-Month High

Aluminum futures decreased to $2,670 per tonne after reaching a three-month peak of $2,628 on July 2nd. This downturn was primarily due to an indication of weaker demand, temporarily overshadowing the anticipated decrease in supply. The available stockpile at the London Metal Exchange rose by over 15,000 tonnes, reaching 415,000 tonnes by the week ending July 15th. This increase aligned with data indicating reduced factory activity in China at the start of the month, as reflected in another contraction in the NBS Manufacturing PMI. Nevertheless, output from China, the top aluminum producer, is expected to slow this year due to an annual production cap of 45 million tons, a measure initially introduced to support carbon emission reduction targets. This development coincides with anticipated higher demand in Europe, where EU countries have indicated plans to expand the production of defense goods. Moreover, the supply for European factories remains constrained due to the sanctions imposed on Russia, a major aluminum producer.