Aluminium prices surged by 1.68% to settle at 241.5, driven by increased fund buying and concerns over raw material shortages in China. The market reacted to news of a bauxite supply disruption from Guinea, as Emirates Global Aluminium (EGA) reported a suspension of exports from its subsidiary, Guinea Alumina Corporation, due to customs issues. This has heightened fears of a supply crunch in an already tight market. Additionally, strong demand from Chinese aluminium producers, who have ramped up production due to healthy profits, has further bolstered prices. In Japan, aluminium stocks at major ports fell 4.3% in September, reflecting tighter supply conditions.
Meanwhile, the premium for aluminium shipments to Japanese buyers for Q4 was set at $175 per metric ton, up 1.7% from the previous quarter, driven by global supply concerns and higher premiums in Europe. The LME October aluminium premium over November also increased to $18 per ton from $5.85 three weeks ago. Looking ahead, the global aluminium market is expected to move closer to balance by 2025, with demand boosted by lower borrowing costs and Chinese stimulus measures. However, Rusal forecasts a global surplus of 500,000 metric tons in 2024, narrowing to 200,000-300,000 tons in 2025.
Technically, aluminium is experiencing short covering, with open interest dropping by 2.59% to settle at 2,484 contracts. Prices are supported at 239.1, with potential downside testing at 236.7. On the upside, resistance is likely at 243.4, and a move above this level could see prices testing 245.3. The market remains sensitive to supply disruptions and global economic conditions.