Aluminium prices declined by 0.69% to settle at 224.7, as profit booking took over after a period of price increases driven by concerns over tight supply. However, the market continues to grapple with subdued demand in China and ample supply, fuelled by strong domestic production and increased inflows from Russia. China's aluminium exports reached 146,708 tons in July, up 9.6% year-on-year, with the majority directed to Russia. Additionally, China imported 129,898 tons of primary aluminium in the same month, marking an 11.5% increase from the previous year, according to customs data.
On the macroeconomic front, U.S. business activity dipped to a four-month low in August, with firms struggling to pass on higher prices to consumers. This suggests that inflation may continue its downward trend in the coming months. The S&P Global (NYSE:SPGI) U.S. Composite PMI Output Index edged down slightly to 54.1 in August from 54.3 in July, still reflecting healthy business activity. In China, aluminium output in July surged by 6% year-on-year to 3.68 million metric tons, the highest monthly output since 2002, driven by new projects in Inner Mongolia and sustained production in other key regions due to a profitable market. For the first seven months of 2024, China's aluminium production reached 25.19 million tons, up 6.7% from the same period last year. Globally, primary aluminium output rose by 2.4% year-on-year in July, reaching 6.194 million metric tons, with China's production contributing significantly to this increase.
Technically, the aluminium market experienced long liquidation, with open interest dropping by 31.93% to settle at 1,614 contracts. Aluminium is currently supported at 222.8, with a potential test at 220.7 on the downside. Resistance is expected at 228.3, and a move above could push prices towards 231.7.