Aluminium Dropped Amid Worries that Slowing Global Growth will hit Metals Demand

  • Commodities Analysis
AJAY KEDIA

Aluminium yesterday settled down by -4.25% at 256.95 amid worries that slowing global growth will hit metals demand as China struggles with Covid-19 and the Federal Reserve is set to sharply raise interest rates. The latest data showed China’s primary aluminum imports fell by 55.1% from a year earlier in March and by 71% in Q1, while Chinese aluminum production rose 1.8% to 3.3 million tons in the 12 months to March, the highest since last May. On top of that, China ramped up aluminum exports, rising 26.7% on an annual basis to 1.6 million tonnes in Q1, as the world scrambles to replace Russia's roughly 6% global market share.  
 
With the acceleration of domestic resumption of production resumption and the pandemic downstream, the inventory decline of the domestic aluminium ingot was slow. SHFE aluminium plummeted by more than 4% in the afternoon amid the acceleration of resumed production and insufficient consumption expectation, and the transaction prices dropped to less than 21,000 yuan/mt. The aluminium ingot social inventories across China’s eight major markets totalled 1.02 million mt as of April 25, down 5,000 mt from a week ago. The transportation restrictions in Wuxi have eased, and buyers were allowed to pick up goods, except for those from high risks areas of COVID, allowing the local inventory to fall by 6,000 mt.  
 
Technically market is under fresh selling as the market has witnessed a gain in open interest by 40.08% to settle at 2464 while prices down -11.4 rupees, now Aluminium is getting support at 252.8 and below same could see a test of 248.5 levels, and resistance is now likely to be seen at 263.7, a move above could see prices testing 270.3.  

Trading Ideas:
# Aluminium trading range for the day is 248.5-270.3.
# Aluminum dropped amid worries that slowing global growth will hit metals demand as China struggles with Covid-19.
# China’s primary aluminum imports fell by 55.1% from a year earlier in March and by 71% in Q1
# The aluminium ingot social inventories across China’s eight major markets totalled 1.02 million mt as of April 25, down 5,000 mt from a week ago.

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