FX.co ★ Aluminum Holds Near 3-Year

In December, aluminum futures in the UK reached $2,950 per tonne, marking the highest level in over three years and reflecting an 18% increase this year due to mounting concerns over limited supply. China, the leading global producer of aluminum, has reaffirmed its focus on preventing overcapacity in metal production to counteract deflationary pressures on manufacturers. The nation is poised to exceed its 45 million-ton production cap this year, compelling smelters to halt output growth until 2026. As a result, companies have opted to distribute their limited supply domestically rather than exporting it, causing a 9.2% annual decline in exports by November. Concurrently, Chinese smelters' efforts to establish new facilities in Indonesia continue to encounter obstacles, including rising energy expenses and regulatory challenges. High energy costs, equipment malfunctions, difficulties in sourcing bauxite, and geopolitical tensions have also led to the suspension of key smelters in countries such as Iceland, Mozambique, and Australia.