Fed Chairman Warsh delivered a hawkish speech at the Jackson Hole symposium, lifting market expectations for a September rate hike to around 60 per cent, while the US dollar consolidated amid fluctuations, unsettling the nonferrous metals sector.
The Fed’s latest Beige Book showed that US economic activity expanded moderately from early July to late August, with employment edging up, but rising energy prices, policy shifts, and international conflicts created greater uncertainty.
US ADP employment for August came in at only 38,000, below expectations and the lowest of the year, sending Treasury yields lower and the dollar tumbling after the release. US-Iran tensions escalated again as US forces struck Islamic Revolutionary Guard Corps targets, pushing international oil prices higher and keeping inflation concerns churning through the market.
On the supply side, weekly aluminium production held steady at 874,700 tonnes this week, with the proportion of liquid aluminium rebounding 0.32 percentage points to 78.78 per cent, further reducing casting ingot volumes. Outside China, production resumptions and new capacity ramp-ups continued, damaged capacity in the Middle East recovered, and overseas aluminium supply kept repairing. On the demand side, peak-season realisation remained slow. The August composite PMI for the aluminium processing industry came in at 48.7 per cent, slightly higher than July but still below the 50 mark.
The September composite PMI for aluminium processing is expected to rise to 51.9 per cent, potentially returning to expansion territory, but performance varied across segments, and the strength of the peak season still depends on the tug-of-war between end-use consumption recovery and restocking willingness amid high aluminium prices. On the inventory side, Thursday’s social inventory of aluminium ingot stood at 815,000 tonnes, down 37,000 tonnes from last Thursday and down 22,000 tonnes from this Monday, with destocking accelerating again. LME inventory at 246,000 tonnes remained at a historical low. However, aluminium billet inventory rose by 2,500 tonnes to 142,000 tonnes, diverging from the ingot side.