Aluminum Prices Climb Amid Supply Worries

Aluminum prices experienced a slight increase, driven by investor concerns over potential long-term supply constraints. This rise occurred despite robust production figures from China and the possibility of Middle Eastern smelters re-entering the global market. The metal closed at $3,388.50 per metric ton on the London Metal Exchange, though it remains lower since a recent US-Iran agreement was announced.

China's primary aluminum output reached a new monthly record in May, with production for the first five months of the year exceeding the government's annual capacity cap. While this surge could pressure prices, analysts believe there is little scope for additional growth in China's production beyond the current year, as most efficiency gains have been realized. Government inspections focused on energy use may also curtail output in key regions like Guangxi.

The global aluminum market has faced higher costs since late February when Middle Eastern smelters were largely excluded. China's increased output and exports have provided some relief. The country's capacity cap, originally intended to curb energy consumption and emissions, is now being closely watched by global investors as its true flexibility is tested.