Global aluminium short-term outlook July 2023

The LME price remained under pressure during July as bearish sentiment dominated trading activity. Chinese economic growth remains sluggish while the US Federal Reserve and the European Central Bank hiked their interest rates by a quarter point amid mixed economic backdrops. The key German economy stagnated in Q2 reflecting weak factory order books, high inflation and tepid consumer spending. In contrast, US consumer spending remains resilient while inflation is on a downward trajectory. We see little reason for the price to stage a sustained rally any time soon, given slowing demand across the major markets and rising output in China. Much will depend on what happens to buying activity once the summer is over. However, early indications are not promising with buyers already looking to shift 2023 volumes into Q1 2024 against an uncertain setting over the near-term end-use demand outlook.