Aluminum Market Turns Bullish: What's Driving the Price Surge?

Aluminum futures have rebounded significantly, surging to over $2,690 per tonne after hitting a four-month low of $2,460 on January 6th. This increase is driven by expectations of reduced supply from major producers and a recovery in demand.

● A crucial level to watch is $2,710, as exceeding this threshold could trigger a further price hike.

◉ Several key factors are influencing aluminum prices:

1. EU Sanctions on Russian Aluminum: The European Union's impending sanctions on primary aluminum imports from Russia will reduce market availability, as manufacturers have already distanced themselves from Russian products following the 2022 Ukraine invasion.

2. China's Record Production: China produced a record 44 million tons of aluminum in 2024, but output is expected to slow as Beijing aims to cap production at 45 million tons to prevent oversupply and meet carbon emission targets.

3. Demand Growth in China: China's industrial output surged in December, accompanied by rising credit aggregates, indicating that the People's Bank of China's monetary stimulus positively impacts economic activity and aluminum demand.