Aluminum futures have climbed to $2,620 per tonne, approaching their highest levels in four weeks. This increase is primarily driven by the combination of a weaker dollar and reduced supply. The recent remarks by Federal Reserve Chairman Powell at Jackson Hole have signaled a potential easing in monetary policy, leading to a decline in the dollar's value. This shift has benefitted industrial economies linked to US credit, thereby boosting prices for industrial metals.
Simultaneously, the situation in Guinea has intensified supply concerns. Guinea Alumina has lost all of its mining licenses following a directive from the country's military-led government, which has transferred all mining rights to a newly established state-operated company. This move could disrupt ore production that supplies Emirates Global Aluminum, one of the major producers in the industry.
Adding to the supply challenges, South32 has announced the closure of its Mozal aluminum smelter in Mozambique due to power supply issues, ending operations at Africa's second-largest smelter. Meanwhile, China's aluminum production is expected to be constrained by its annual cap of 45 million tons, limiting further supply growth from the world’s leading producer.
