Aluminum gains as smelters in southwestern Yunnan province began reducing capacity

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Aluminum gains as smelters in southwestern Yunnan province began reducing capacity

Aluminium closed with a significant gain of 1.01%, settling at 205.45, driven by developments in China's southwestern Yunnan province, where smelters initiated cuts totalling 1.15 million tons of capacity in response to power curbs anticipated until April. This reduction in capacity, aimed at complying with power constraints, influenced the positive momentum in aluminium prices. Importantly, China's aluminium imports marked their fifth consecutive monthly increase in October, as revealed by customs data.

The world's leading consumer and producer of aluminium imported 351,065 metric tons of unwrought aluminium and related products last month. This figure represents a 5.8% rise from September and a substantial 78.7% increase from the same period last year. Solid demand and expectations of reduced domestic supply contributed to the improved buying appetite for imported aluminium. In the broader economic context, China's central bank and financial regulators reinforced their commitment to supporting the property sector and addressing local government debt risks. This strategic move is part of China's broader efforts to revive its economy and mitigate potential financial risks associated with a property downturn and substantial local government debt totalling 92 trillion yuan ($12.77 trillion).

Technically, the aluminium market is undergoing short covering, marked by a -15.17% drop in open interest and a price increase of 2.05 rupees. Support is identified at 204.8, with a potential test of 204.2 on the downside, while resistance is anticipated at 205.9, with a possible test of 206.4 on the upside.

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