LME aluminum held the $3,400 support level on Friday, settling at $3,402/mt. The price action was notably resilient compared to COMEX, with LME volumes actually declining 12% on the day. The $3,400 level has been tested three times this month and failed to break, suggesting genuine buyer interest at that price point.
European smelter capacity utilization remains at 65%, down from 67% at the start of the year. High energy costs continue to constrain production, with German and French smelters operating well below nameplate capacity. The Q4 2025 curtailments at two Spanish smelters have not been reversed.
Chinese aluminum exports declined in May, falling to 480,000 tonnes from 520,000 tonnes in April. The decline was driven by stronger domestic consumption and the removal of the export VAT rebate for semi-fabricated products. The export cap is providing indirect support to global aluminum prices.
LME warehouse inventories edged 0.5% lower to 892,000 tonnes. The drawdown was concentrated in Asian warehouses, particularly South Korea and Malaysia. Alumina prices remain elevated at $480/mt, squeezing non-integrated smelters and limiting their ability to increase output.
The $3,400 level on LME has proven resistant to multiple tests. Buyers should place limit orders at $3,380-3,400 for Q3 coverage. The risk of a sharper correction exists if the macro environment deteriorates, but the physical supply tightness provides a structural floor.