Despite China's total output of primary aluminium in the month of October, 2025, recorded 3.8 million tonnes, representing an increase of 0.4 per cent year-on-year, a decline of 9 per cent has been witnessed from September's production.
The month-on-month decline in Chinese aluminium production indicates reinforced supply conditions. On the other hand, downside remained limited due to the Chinese smelters' focus on nudging government-imposed capacity limits, which is directly linked with the rising concerns over the compelled output for the coming months.
A demand pressure is seen within the latest economic data released by China, where the economic output is seen to be growing by 4.9 per cent, with the retail sales rising at 2.9 per cent, which is deemed to be the slowest in a single year.
A month-on-month dip of 0.5 per cent is seen in the new home prices, with the latest bank loans sharply slumping, indicating weak credit demand and the continuous stress upon the ongoing property market. Despite softness, aluminium gained good support from the ongoing disruptions on the supply side globally.
Tightened supply outlook came after Iceland's smelter outages, Century Aluminium curtailments and Alcoa's refinery shutdown in Australia. Concurrently, in the rising premiums, the tightness of the physical market was also reflected, where the premiums of the European aluminium climbed to USD 328, nearly double the levels seen in June.
Nevertheless, the fund inflows into the London Metal Exchange (LME) aluminium have significantly risen, backed by the expectations of a tighter supply. A mixed outlook is seen by the banks, with Goldman Sachs revising its long-term forecast downward. Concurrently, ANZ widened its target outlook for the short-term, aiming for USD 2,900 per tonne whilst observing improved global manufacturing demand.
Aluminium is deemed to be under the long liquidation, where the open interest is USD 2,403, down by 4.94 per cent. The support is seen at USD 265.5 with expected further decline to USD 264. Resistance is recorded at USD 269.6 alongside a breakout, which may lift the price to USD 272.2.
