LME three-month aluminum settled at $3,164/mt on June 26, up $32 from the prior session but still near 30-day lows. The contract has lost 15.36% over the past month, driven by weakening demand signals from Europe and North America and relentless supply growth from China.
European manufacturing PMI fell to 47.8 in June, marking the fifth consecutive month of contraction. German industrial orders dropped 2.8% month-on-month in April, with automotive — the largest aluminum-consuming sector — showing particular weakness. Construction activity in the Eurozone also softened as ECB rate hikes continued to weigh on building permits.
In the US, the Midwest premium has compressed to $0.19-0.21/lb, down from $0.24 in April, reflecting softer demand from the automotive and packaging sectors. US aluminum mill product shipments fell 3.1% year-on-year in May according to the Aluminum Association. The one bright spot: aerospace plate orders remained robust, up 8% year-on-year.
The supply side tells a different story. China produced a record 3.65 million tonnes of primary aluminum in May, up 4.2% year-on-year, as smelters in Yunnan restarted capacity after hydropower availability improved. Global primary aluminum production hit an all-time high of 6.15 million tonnes in May, according to IAI data.
LME stocks drew 0.64%, offering some support, but the pace of draws has decelerated from mid-June levels. The stocks-to-consumption ratio on the LME remains adequate at roughly 8 days of global consumption. Unless demand picks up in Q3, the supply overhang will keep aluminum prices under pressure.
Buyers now have negotiating leverage. Aluminum is down 15% in 30 days with weak demand indicators across major economies. For Q3 procurement, push for index-minus pricing rather than fixed premiums. Watch China’s Yunnan output carefully — further restarts could push the surplus above 500,000 tonnes by year-end. If you have European exposure, the physical premium component remains sticky; negotiate freight and handling separately from the LME component.