- Middle East smelter restarts progressing faster than expected
- Chinese National Day holiday slows down market trading activity
LME aluminium prices declined sharply in the week ended 2 October, with three-month aluminium prices falling $145/t, or 4.4% w-o-w, to $3,122/t from $3,267/t on 25 September. The decline reflected a stronger US dollar, expectations of improving global supply and cautious demand sentiment, while thin trading activity during China’s National Day holiday also weighed on prices.
Meanwhile, LME aluminium inventories declined by 1,000 t, or 0.4% w-o-w, to 240,375 t on 2 October from 241,375 t on 25 September. Stocks remained near historically low levels, providing some underlying support despite the sharp price correction.
Factors weighing on LME aluminium prices
LME aluminium prices came under pressure from expectations of improving supply, as Middle East smelter restarts progressed faster than previously expected and additional production capacity in Indonesia raised prospects of greater availability. Higher Chinese aluminium exports and record-high August production also added to supply concerns.
Broader macroeconomic pressure also weighed on sentiment. The US dollar strengthened to its highest level since May 2025, while elevated Treasury yields increased pressure on dollar-denominated base metals. Weak downstream demand and cautious market sentiment further encouraged long liquidation, while China’s National Day holiday reduced trading activity.
Outlook
LME aluminium prices are expected to remain volatile in the near term, with improving supply prospects, elevated Chinese exports and macroeconomic headwinds likely to limit upside. However, historically low LME inventories and continued physical supply tightness could provide some downside support and help prices stabilise.
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