Aluminium Dropped Amid A Pessimistic Industrial Sentiment

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Aluminium Dropped Amid A Pessimistic Industrial Sentiment
Credit: © Reuters.

Aluminium experienced a decline of -0.52%, settling at 200.05, influenced by a cautious industrial sentiment in China, the world's largest consumer of base metals. Persistent macroeconomic challenges in the Chinese economy continued to impact the outlook for aluminium and other base metals. The share of available aluminium stocks of Russian origin in London Metal Exchange (LME) warehouses remained constant at 90% in January, despite restrictions imposed by Britain on the physical delivery of Russian-made base metals since December 15. 

While broader geopolitical concerns persist, Russian primary aluminium stocks on LME warrant decreased from 338,375 metric tons in December to 286,750 metric tons in January, indicating potential shifts in supply dynamics. The market has been closely monitoring the impact of sanctions on Russian metal flows through LME-registered warehouses. Federal Reserve policymakers are likely to delay interest rate cuts until June, as suggested by traders betting on futures contracts tied to the Fed's policy rate. This expectation emerged after a government report revealed that consumer inflation exceeded expectations in January, with the consumer price index rising 3.1% year-on-year. 

Technically, the market displayed signs of fresh selling, with a 3.08% increase in open interest, settling at 2,876 contracts. Aluminium now finds support at 199.3, with potential downside testing of 198.4. On the upside, resistance is anticipated at 201.5, and a breakthrough could lead to testing levels around 202.8. 

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