Aluminium dropped as the inventory of aluminum ingots in Wuxi increased.

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Aluminium dropped as the inventory of aluminum ingots in Wuxi increased.
Credit: © Reuters.

Aluminium prices experienced a decline of -0.87% to settle at 204.3, influenced by a notable increase in aluminium ingot inventories in Wuxi, reaching 223,000 mt, up by 13,000 mt from the previous week. The surge in inventory is attributed to the shift to the off-peak season of downstream consumption, resulting in significant pressure. Social inventories remain at a 6-month high. China's announcement of issuing an additional one trillion yuan of local government bonds aims to stimulate the economy and market.

In terms of fundamentals, some aluminium billet factories have reduced production, but the ingot casting volume has increased month-on-month, maintaining a high domestic aluminium supply. Imported ingots continue to enter China, leading to a loose market supply in East China. China's October aluminium production reached a record monthly high, rising 6% from a year ago to 3.62 million metric tons, driven by higher smelter profits and robust domestic demand, especially from the new energy sector.

From a technical perspective, the market witnessed long liquidation, with a 1.72% drop in open interest to settle at 2909. Aluminium prices declined by -1.8 rupees. The current support level for aluminium is identified at 203.4, with a potential test of 202.5 below. Resistance is expected at 205.7, and a move above could lead to prices testing 207.1.

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