FX.co ★ Aluminum Rises to 3-Year High

In October, aluminum futures surged beyond $2,750 per tonne, reaching their highest level in over three years, driven by limited supply and strong expectations for increased demand in the long run. In response, Chinese authorities have revised their annual output growth target for base metals, reducing it to an average of 1.5% annually for 2025 and 2026, down from the previous 5% target. This adjustment aligns with China's aluminum output cap of 45 million tons, a threshold expected to be exceeded this year under the current capacity, within the framework of Beijing's initiative to curb manufacturing capacities to manage deflationary pressures. Additionally, Alcoa has announced the closure of its Kwinana alumina refinery in Australia due to deteriorating bauxite ore quality. Concurrently, the anticipated rise in aluminum consumption over the long term is bolstered by corporate commitments to invest in new data centers, which require substantial amounts of aluminum. Furthermore, the significant growth in Chinese manufacturing, as indicated by the broader private PMI, also underpins the positive outlook for goods production.