Aluminium prices climbed as supply headwinds offset demand support.

  • Kedia Advisory
  • Commodities News
Aluminium prices climbed as supply headwinds offset demand support.
Credit: © Reuters.

Aluminium exhibited a 1.2% increase, settling at 202.85, fueled by a confluence of supply challenges and resilient demand. Notably, China's robust 34.2% surge in aluminium imports in November, reaching 343,109 metric tons, underscores the nation's strong demand and anticipation of reduced domestic supply. This surge was attributed to both heightened demand and the likelihood of diminished domestic output due to cutbacks in Yunnan province. 

Yunnan's move to curtail production during its dry season added to supply concerns and prompted increased imports. While November imports slightly dipped from October's peak, the overall trend indicates a 28.3% rise in China's imports of unwrought aluminium and related products for the first 11 months, reaching 2.74 million tons. Conversely, domestic aluminium output in November grew by 4.6% YoY to 3.488 million metric tons, but Yunnan's production cuts resulted in a daily output reduction of 1,185 metric tons to 116,300. The year-to-date output for January-November stood at 37.946 million metric tons, reflecting a 3.6% YoY increase. 

From a technical standpoint, the market is experiencing short covering, with open interest remaining steady at 2758. Despite this, prices rose by 2.4 rupees. Aluminium support is identified at 200.5, with a potential downside test of 198.1. On the upside, resistance is anticipated at 205, and a breakthrough could propel prices to 207.1.

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