Aluminium Dropped As Traders Gauged The Lack Of Fresh Market-Moving Catalysts

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Aluminium Dropped As Traders Gauged The Lack Of Fresh Market-Moving Catalysts
Credit: © Reuters.

Aluminium closed down by -0.52% at 200.7 as traders observed a lack of fresh market-moving catalysts and subdued trading activity ahead of a long public holiday in China, a major consumer. The China Nonferrous Metals Industry Association (CNIA) reported a 30% decline in the volume of aluminium product exports from China to the European Union covered by the bloc's carbon border tariff in 2023. The EU's Carbon Border Adjustment Mechanism (CBAM) aims to prevent environmentally harmful foreign products from undermining the bloc's green transition. China's official PMI data indicated a contraction in factory activity for the fourth consecutive month, but the Caixin China General Manufacturing PMI unexpectedly showed growth at 50.8 in January 2024, beating market forecasts. 

This contrasted with official data, highlighting mixed signals in China's manufacturing sector ahead of the Lunar New Year celebration. Primary metal imports surged to 1.54 million metric tons globally, falling just short of the record set in 2021. However, Japan experienced a 26% decline in primary aluminium imports to 1.03 million metric tons in 2023, reflecting slow demand in the construction and manufacturing industries. 

Technically, the aluminium market is under long liquidation, with open interest remaining unchanged at 3647 and prices down by -1.05 rupees. Aluminium support is at 200.1, and a breach below may lead to a test of 199.3 levels. Resistance is expected at 201.7, and a move above could see prices testing 202.5. 

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