FX.co ★ Aluminum Holds Near 3-Month High

Aluminum futures have advanced towards $2,600 per tonne, maintaining proximity to the three-month peak of $2,628 reached on July 2nd. This movement reflects expectations of a reduction in supply alongside a tempered outlook for manufacturing demand. Production in China, the leading aluminum producer, is anticipated to slow this year as the annual production ceiling of 45 million tons has been set to facilitate carbon emission goals. Concurrently, demand in Europe is projected to increase as EU nations indicate plans to boost defense goods manufacturing, while the supply to European factories remains constrained due to sanctions on Russia, a major producer. At the London Metal Exchange (LME), on-warrant stocks have risen since the beginning of the year, although overall inventories at both the LME and the Shanghai Futures Exchange (SHFE) are approximately 60% lower compared to the same period last year. Despite this, the official manufacturing Purchasing Managers' Index (PMI) from China's National Bureau of Statistics (NBS) has reported another month of contraction in the sector.