LME aluminium slips w-o-w on tariff pressure; Fed rate cut hopes may offer near-term support

• US expands aluminium tariffs to wider range of goods
• Global aluminium output rises 2.5% y-o-y in Jul’25

London Metal Exchange (LME) aluminium prices saw an overall dip during Week 34 of CY’25 (18-22 August 2025).

Aluminium prices declined for three consecutive sessions this week after the US expanded its 50% import tariff to include a wider range of aluminium-based products. The move sparked concerns over reduced global trade flows and added pressure on already fragile market sentiment.

However, towards the end of the week, prices rebounded amid signs of improving demand in the top consumer, China.

Price performance, inventory trends

LME aluminium prices averaged around $2,577/tonne (t) in Week 34, reflecting a 0.5% decline from Week 33 (11-15 August). Prices opened the week on a firm note at $2,583/t but softened mid-week to $2,565-2,568/t. However, they regained some strength by the week’s end, closing at $2,587/t.

Meanwhile, aluminium stocks at registered warehouses saw minor inflows of 0.3%, to 479,365 t in Week 34 from 478,160 t in Week 33.

Additionally, at Jackson Hole, Fed Chair Jerome Powell signalled that interest rate cuts may be near, citing a softening labour market and balanced inflation risks. While avoiding a direct commitment, Powell noted shifting economic conditions may warrant policy easing soon, likely as early as September, marking a potential turning point in the Fed’s monetary stance.

Global aluminium output edges up in Jul’25

Higher global supply limited any significant upside in prices. According to the International Aluminium Institute (IAI), global primary aluminium production rose by 2.5% y-o-y in July to 6.373 mnt, reflecting steady recovery in smelter activity across key producing regions.

China’s aluminium output grew 1.05% y-o-y and 3.11% m-o-m in July, supported by new Phase II replacement capacity in Shandong and Yunnan.

Looking ahead

LME aluminium prices may find support as investors anticipate a potential US rate cut following Fed Chair Powell’s dovish Jackson Hole speech. A softer greenback, driven by rate cut expectations, could boost demand for dollar-priced metals. Aluminium may benefit from improved investor sentiment and potential economic stimulus, despite ongoing concerns about inflation and global growth.