Foreign media reported on November 27th that aluminum prices are holding steady, resisting the overall downward trend in industrial metals. Traders are concerned that due to supply restrictions in China, there may be a shortage of aluminum supply next year.
Earlier on Monday, the usage of this commodity is very widespread, ranging from soda cans to airplanes, and it saw the highest increase of up to 0.9%. Due to China’s winter power shortages and local smelter capacity limits, copper prices have been consistently constrained, providing support for the rise in copper prices. Chinese smelters account for over half of global supply.
With China increasing its support for the real estate industry, aluminum prices have temporarily risen since hitting a low point last month. The real estate industry is a significant consumer of metals globally. Expectations of the Federal Reserve’s monetary policy easing next year have weakened the US dollar, which also provides support.
Goldman Sachs Inc. analysts led by Nicholas Snowdon wrote in a report on November 26th that the tightening outlook for aluminum is primarily driven by “the impact of Chinese supply constraints, with the dual factors of China hitting capacity limits and winter production cuts in Yunnan meaning that next year onshore primary production may only increase by 2%.”
The bank predicts that global raw metal shortages will reach 1.23 million tons next year, nearly double the shortage in 2023, and prices will rise to $2,600 per ton in 12 months. Currently, the aluminum market shows ample supply in the near term, with a discount of over $40 per ton for London Metal Exchange (LME) spot prices compared to benchmark futures prices.
LME aluminum futures rose 0.2% to $2,218.50 per ton, London time. Other metals fell after data showed a slowdown in industrial profits in China in October, with copper prices down 0.7% and zinc prices down 0.6%.