Aluminium prices fell -1.82% to settle at 208.25, mostly due to a significant rise in stocks in warehouses approved by the LME, which have risen by 28% to 566,375 tonnes since December 6.
The sentiment of the market has been influenced by this increase in inventory. Particularly for a metal widely used in the packaging, construction, and power sectors.
Nonetheless, the negative impact appears to be contained, as support for aluminum was found due to concerns about the availability of alumina as a feedstocAlumina, a vital raw material made from bauxite, was not readily available due to damage to fuel stocks at the main terminal caused by an explosion that occurred in Guinea last month.
December 2023 saw a slight increase in the Caixin China General Manufacturing the Purchasing Managers Index (PMI) to 50.8, above market expectations and the highest reading since August.
Production increased at its quickest rate since February, and new orders increased for the first time in 7 months. But the rate of decline in new export orders was the slowest in six months. While a private survey indicated an unexpected rapidity in the growth of China’s manufacturing sector.
Official data showed a further contraction in the country’s manufacturing industry in December. This has given rise to rumours that the People’s Bank of China may further loosen regulations in 2024 in order to aid in the recovery of the economy.
Technically speaking, the market is going through a protracted liquidation, as seen by a -7.99% decline in open interest. 206.4 is the level at which aluminium prices is finding support; a breach below this level could test 204.3. On the upside, 212 is probably the resistance level; a move above there might take us to 215.5.