FX.co ★ Aluminum Eases from 8-Week High

Aluminum futures in the UK retreated to $3,200 per tonne from an eight-week high of $3,360 reached on August 11th, as increased supply from China offset supply disruptions stemming from the war in the Middle East. Exports of aluminum from China, the world's largest producer, jumped 18.7% year-on-year in July. With domestic demand subdued, Chinese producers ramped up shipments abroad despite Beijing’s 45-million-ton output cap, partially easing shortages triggered by the conflict in Iran.

At the same time, supply risks have intensified elsewhere. The Alunorte facility in Brazil, the largest alumina refinery outside China, was forced to cut operations to 50% of capacity due to a shortfall in natural gas deliveries from its supplier. The move further strained its client Norsk Hydro, which had already declared two force majeure events on aluminum sales after its Qatari joint venture, the Qatalum plant, was forced to halt production amid natural gas shortages. Liquefied natural gas (LNG) shipments from the Middle East—critical for aluminum refining—have been limited by tanker blockades involving the US and Iran, exacerbating the tightness in global supply.