Aluminum futures in the UK rose past $2,870 per tonne in October, the highest in over three years amid a backdrop of tight supply in the near term and bullish longer term demand. Top producer China reiterated its priority of preventing overcapacity in metal production as strong competition between the country’s smelters contributed to an ongoing producer deflationary spiral. This was in line with its aluminum output cap of 45 million tons annually, which was set to be breached later this year. Troubles for key refineries also pressured supply, with one of two potlines in Iceland’s Grundartangi smelter being suspended due to electrical equipment failure. Also, Alcoa announced it will shut its Kwinana alumina refinery in Australia due to deteriorating bauxite or grades. Meanwhile, aluminum’s ample usage in key fast-growing sectors of electrification maintained buying from consumers. This added to the improving shorter term sentiment as US and China grew closer to striking a trade deal.
