FX.co ★ Aluminum Falls to 4-Week Low

Aluminum futures in the UK have dipped to approximately $2,700 per tonne, marking their lowest point since late October. This decline is part of a broader retreat from risk assets ahead of critical US data releases. Additionally, some Federal Reserve officials have expressed reservations about further rate cuts, which has negatively impacted the demand outlook for commodities. Despite this downturn, underlying market conditions for aluminum remain tight. China has reiterated its commitment to curtailing overcapacity in metal production to alleviate deflationary pressures. The country's aluminum production is anticipated to exceed its 45 million-ton ceiling next year. Meanwhile, China's initiatives to establish new smelters in Indonesia are being hampered by escalating energy costs and regulatory challenges. These supply pressures have been exacerbated by interruptions elsewhere, such as the suspension of a potline at Iceland’s Grundartangi smelter due to equipment malfunction. Furthermore, in Australia, Alcoa is set to close its Kwinana alumina refinery as the quality of bauxite ore continues to degrade.