Aluminium Pared Gains On Profit Booking After Seen Supported By Chinese Policy

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Aluminium Pared Gains On Profit Booking After Seen Supported By Chinese Policy
Credit: © Reuters.

Aluminium prices experienced a marginal decline of -0.05%, settling at 203.05, driven by profit booking after a period of support fueled by optimism about Chinese policy measures following a seasonal lull. China's central bank governor, Pan Gongsheng, announced a 50 basis points reduction in the reserve requirements for banks starting from February 5, the first such move this year. The World Bureau of Metal Statistics (WBMS) reported that in November 2023, global primary aluminium production reached 5.8613 million tons, and consumption was 5.9714 million tons, resulting in a supply shortage of around 80,000 tons. Notably, global bauxite production stood at approximately 32.35 million tons, with global alumina output reaching 11.82 million tons.

For the first 11 months of 2023, there was a surplus of around 600,000 tons in the global primary aluminium market, as production totalled 63.8 million tons, and consumption was 63.2 million tons. In December, global primary aluminium output rose 2.1% year on year to 6.041 million tonnes, according to data from the IAI. Additionally, China's aluminium imports surged by 28% in 2023, as per customs data, driven by robust demand and higher prices in the world's largest consumer market for the metal.

From a technical standpoint, the aluminium market showed signs of long liquidation, with a 1.9% drop in open interest, settling at 3871. Despite a marginal decrease in prices by -0.1 rupees, support is identified at 201.7, and a breach could lead to a test of 200.2. Conversely, resistance is anticipated at 204.2, and a breakthrough might propel prices to test 205.2.

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